PARIS: European closed at a fresh one-month high on Wednesday, with German stocks finishing above the 20,000 mark, while attention was on France where a no-confidence vote in parliament was likely oust Prime Minister Michel Barnier’s government.
The pan-European STOXX 600 index closed higher by 0.3% and notched its fifth straight session of advances, with retail stocks leading sectoral advances by 2.2%.
France’s CAC 40 closed up 0.6% as the debate on the no-confidence motion was underway ahead of the vote due around 1830-1900 GMT.
Barnier’s three-month old fragile government is expected to be forced out at a time when the country is struggling to tame a massive budget deficit, and French President Emmanuel Macron said he aims to install a new prime minister quickly if his government falls.
“There is clearly a decent level of uncertainty and division within France around the right way forward,” said Richard Flax, chief investment officer at Moneyfarm.
“Whatever budget gets eventually put forward, or even whether (the current budget) is rolled over, the challenge of resolving these fiscal and debt dynamics is that it is a multi-year process.”
France’s political uncertainty also hit its services sector, data showed, while the euro zone’s business activity fell sharply.
Political chaos in France has weighed on the CAC 40 which is down over 3% this year and is the top decliner among peers. The euro has lost over 4% this year, while spreads between French and German bonds have widened to a 12-year high.
On Tuesday, Germany’s DAX rose 1% and closed above the 20,000-point mark for the first time, boosted by SAP’s 3.7% advance.
Among others, Vestas bottomed the STOXX index with a 10.9% slide after the Danish wind turbine maker said CFO Hans Martin Smith would step down by end-2024.
Signify lost 4.3% after Barclays downgraded the stock of the lighting maker to “underweight” from “overweight”.
Meanwhile, AstraZeneca and Novartis lost around 3% each, dragging down the healthcare index, after HSBC cut the target price of the former and downgraded the latter to “reduce” from “hold”.
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