What happened
European stock markets and government bonds have experienced a significant sell-off due to the escalating unrest in France, which has spread to Italy. The Cac 40 in France fell by 1.5%, while Italy's FTSE MIB declined by 1.9%. The FTSE 100 in Britain and Germany's Dax also saw substantial drops, with declines of 1.3% and 1.5%, respectively.
The bond market has also been affected, with France's ten-year borrowing costs rising sharply from 4.78% to nearly 4.91%. Italy's ten-year yields jumped from 4.48% to 4.58%, and Britain's ten-year bond yields spiked from less than 5.38% to nearly 5.44%.
Despite the turmoil, the pound has climbed to nearly €1.19, its highest level since May last year. Investors are increasingly anxious about France's debt pile and political paralysis, which has been exacerbated by the recent unrest and upcoming election.
French Prime Minister Sebastien Lecornu has vowed to restore order, blaming far-Left groups for the unrest. The situation has been described as 'storm clouds gathering' by Maike Currie of PensionBee, who notes that markets have little patience for governments without a credible plan to manage their finances.
