European Stocks Dip Amid French Political Uncertainty

European stocks edged lower on Tuesday morning as investors weighed political uncertainty in France following Sunday’s election results.

The pan-European Stoxx 600 index was down 0.05% at 10:15 a.m. in London, led by losses in oil and gas stocks, which fell 0.9%. BP shares dropped 3.5% after the company announced a second-quarter earnings hit of $1 billion to $2 billion due to impairments and an additional $500 million to $700 million from significantly lower refining margins.

Despite the broader European trend, the U.K.’s FTSE 100 index rose 0.2%. This follows the Labour Party’s decisive victory last week, which is seen as supportive of U.K. assets and sectors such as house builders.

In France, the Paris CAC 40 index fell 0.5% as traders assessed the implications of a hung parliament and potential prolonged political uncertainty. The left-wing New Popular Front won the largest number of seats in the final round of voting, thwarting an anticipated surge for the far-right. However, the alliance did not secure an absolute majority, suggesting a coalition or technocratic government may be needed, complicating the legislative process.

Credit markets have adjusted French risk pricing to about halfway back to pre-election levels. “It’s a wait-and-see trade, and the market’s told you that,” said Rathbones’ Bryn Jones on CNBC.

Overnight, Asia-Pacific markets mostly rose on Tuesday. Meanwhile, U.S. stock futures remained steady after the S&P 500 and Nasdaq Composite closed at record highs on Monday.

This mixed performance in global markets reflects investor caution amid ongoing political and economic developments.

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