Selling spread across European shares, French sovereign debt and the euro on Monday as weekend violence in France heightened investor concerns. A busy corporate reporting calendar added to the caution after disappointing results early in the third-quarter earnings season.
France’s borrowing costs reflected the pressure: its 10-year government bond yield climbed seven basis points to 4.849%. The yield gap relative to Germany reached a level last seen in 2012, indicating that investors required greater compensation for holding French debt rather than the German securities considered safer.
French government bonds, or OATs, have sustained some of the heaviest losses during the broader retreat in global bonds. Inflation concerns, expectations for higher interest rates and unease over public borrowing have driven that selloff. Bond prices move inversely to yields.
Currency markets also weakened, with the euro trading at $1.1197 in Monday’s early session, a decline of 0.4% against the dollar.
Among equities, France’s CAC 40 lost 1.36%, a steeper decline than the 0.8% fall in the regional Stoxx Europe 600 benchmark. The losses came as investors reassessed sovereign risk in France, the eurozone’s second-biggest economy.
Retail-related French companies were among those under pressure. Shares in supermarket operator Carrefour and shopping-centre developer Klepierre fell following damage and looting over the weekend.
Demonstrations drew hundreds of thousands of people to major French cities, with anger focused on expensive goods, inflation and deteriorating public services. The unrest, among the country’s most severe in years, involved extensive property destruction, ransacked shops and large-scale arrests.
The violence underscored dissatisfaction with Emmanuel Macron’s presidency. Social tensions, economic weakness and rising national debt have increasingly marked his final term before 2027.
Investors now face a packed week of company results. Weak sales reported by French luxury group LVMH have already unsettled the opening stages of the third-quarter reporting period.
