By Harshit Kumar Siddharth | October 6, 2025 | London, UK | 15:30 BST
European equities faced turbulence on Monday as investors absorbed the news of France’s Prime Minister Sebastien Lecornu resigning unexpectedly, just weeks after assuming office. The political shake-up adds to a period of instability following the collapse of François Bayrou’s government, leaving markets uncertain.
French Political Turmoil Hits European Markets
The CAC 40 index dropped approximately 1.4%, trimming some losses later in the session, while the pan-European Stoxx 600 held relatively flat around mid-afternoon London time, despite recording five consecutive days of gains last week. French banks were particularly affected, with Societe Generale, BNP Paribas, and Credit Agricole each declining more than 3% in early trading. Meanwhile, the 10-year French government bond yield rose to 3.5719%, reflecting investor concern over rising political risk, and the euro weakened by roughly 0.4% to $1.1697.
Read more on France’s political crisis for context.
Corporate Sector Faces Pressure
Amid the political turmoil, French corporations also experienced volatility. Aston Martin shares fell nearly 8% after issuing a profit warning, citing ongoing tariff pressures affecting its European exports. Renault announced plans to cut 3,000 positions across finance, marketing, and HR departments, contributing to a nearly 2% drop in its stock.
Other European automakers, however, posted positive movements. Stellantis gained close to 2% after announcing a $10 billion U.S. investment, including new facilities in Illinois and Michigan. Swedish online bank Avanza Bank Holding also surged roughly 4% following the addition of 132,000 new customers this year.
Global Market Context
U.S. stocks continued their momentum on Monday, shrugging off concerns about the ongoing government shutdown. Wall Street recently recorded historic highs last week, despite delays to key economic data releases, including the September jobs report.
Across the Asia-Pacific, Japan’s Nikkei 225 rose more than 4% to a record high, following the election of Sanae Takaichi as the new leader of the Liberal Democratic Party, paving the way for Japan’s first female prime minister.
Outlook Amid French Political Turmoil
Investors are now closely monitoring France’s political developments, recognizing that further instability could continue to affect European equities, bond yields, and currency markets. While select sectors show resilience, broader market sentiment is likely to remain cautious until France stabilizes its government and budgetary policies.
Political analysts suggest that if France fails to restore confidence, the repercussions could extend beyond Europe, affecting global trade and investment strategies. Companies with strong European exposure, especially in finance and manufacturing, may need to prepare for increased volatility.
In conclusion, the resignation of Prime Minister Sebastien Lecornu underscores the fragility of French governance and its direct impact on financial markets. Investors, policymakers, and businesses alike must carefully watch how the situation evolves in order to mitigate potential risks associated with prolonged political turmoil.
