French stocks fell, Monday, as concerns escalated over public debt and borrowing costs, after the violence that the country witnessed during weekend protests brought political and social pressures back to the forefront, on the eve of Parliament’s vote on 2027 budget revenues.
The main CAC 40 index fell by 1.23 percent to 7,858.64 points by 09:40 a.m. local time, lagging the performance of European markets, at a time when the French index lost more than 3 percent since the beginning of the year, while the European Stoxx 600 index rose by more than 8 percent during the same period.
Concerns extended to the sovereign debt market, as the French ten-year bond yield rose to 4.85 percent, compared to the German yield falling to 3.41 percent. The spread between the two returns widened to 144 basis points, compared to about 137 basis points on Friday, reaching levels not seen since 2012, in a sign of increased investor caution towards the risks associated with French debt.
Deutsche Bank analysts warned that the violence may make international investors less willing to buy French government bonds, known as OAT, adding that the slight improvement witnessed in French yield spreads in recent days will be subject to a new test.
For her part, Kathleen Brooks, director of research at XTP, expected the difference to widen to about 150 basis points, in light of the accumulation of political and social pressures in conjunction with the government’s efforts to approve a budget that includes measures to control public finances during the coming year.
On Tuesday, the French National Assembly will vote on the revenues of the 2027 budget, which includes measures to correct public finances worth 43 billion euros, in an important political test for the government amid escalating living pressures.
The October 17 protests were followed by acts of looting, vandalism, and unrest in a number of French cities. According to the authorities, the events resulted in approximately 2,400 arrests and the injury of approximately 1,000 police and gendarmerie personnel. The network of French Chambers of Commerce and Industry also expected the number of directly affected stores to exceed two thousand, while trade and distribution sector federations estimated the cost of the damage at hundreds of millions of euros.
In the currency market, the euro fell by 0.26 percent to $1.1208, amid fears that the unrest will increase political pressure on the government and exacerbate uncertainty about the budget. Brooks warned that any increase in political support for forces opposed to the European Union may add new pressures on the single currency.
Banks, retail and tourism are in the losses
The wave of decline included most of the stocks included in the CAC 40 index, with the banking, retail, tourism, and commercial real estate sectors incurring noticeable losses.
“Stellantis” stock topped the losses, falling by 3.2 percent, followed by “Unibail Rodamco Westfield,” which specializes in shopping malls, with a decline of 3.05 percent, then the “Accor” hotel group, whose stock fell 2.84 percent.
Tire maker Michelin's shares also fell by 2.44 percent, and Carrefour's retail shares fell by 2.29 percent. Shares of major French banks fell, as Société Générale fell 2.16 percent, Credit Agricole 2.13 percent, and BNP Paribas 2.08 percent, while the insurance company AXA lost 1.56 percent.
The losses extended to the aviation and defense sectors, with Airbus shares falling 2.22 percent and Thales shares falling 2.18 percent.
On the other hand, Euronext shares, operator of the Paris Stock Exchange, rose by 1.61 percent, and Capgemini shares rose 1.28 percent, while Total Energies shares recorded limited gains of 0.42 percent.
Major Gulf stock markets moved limitedly in early trading on Monday, with tensions in the Middle East keeping investors on edge, in light of the explosion of an oil tanker in the Strait of Hormuz and continued uncertainty about reopening the waterway.
Brent crude futures fell by 2.08 percent to $107.57 per barrel, by 06:19 GMT, after closing on Friday at their highest levels since May 19, with investors taking profits, following US President Donald Trump’s exemption of Russia from sanctions and customs duties, in a move that could lead to an increase in Russian fuel exports.
In Saudi Arabia, the main index fell by 0.3 percent, affected by the decline in the shares of the “Saudi Arabian Mining Company” (Ma’aden) by 1.7 percent, and the decline in the shares of “National Bank” by 0.8 percent.
Saudi Aramco shares fell by 0.3 percent.
In Dubai, the main index stabilized, despite the rise in Dubai Investments shares by 2.4 percent. The group intends to offer a 20 percent stake in DIB Holding Company, which owns the Dubai Investment Park real estate activity, in the first initial public offering in the Emirates this year, and one of the few offerings in the Gulf region since the outbreak of the war with Iran.
In Abu Dhabi, the index fell by 0.2 percent, while the Qatari index fell by 0.5 percent, trading at its lowest levels in more than six years.
A study conducted by the Ifo Institute, published on Monday, showed that the German industrial sector has lost about half a million jobs since 2019, as manufacturers face increasing competitive pressures.
According to the study, the number of workers in the German industrial sector was 496,000 fewer people at the end of 2025, compared to the beginning of 2019, a decrease of 7.1 percent.
In contrast, more than 2.2 million jobs were created in the service sector, especially in the fields of health and social services, as well as in public administration.
“Germany is witnessing an accelerating structural transformation,” said Joachim Ragnitz, Director General of the Ifo Institute. The irony is that the same sectors that have so far maintained our prosperity are witnessing a contraction.”
He added that the new jobs are not being created, for the most part, in sectors where Germany has particularly high productivity and innovation, warning that this could slow the potential for future economic growth.
The study indicated that employment is declining in almost all industrial sectors, likely as a result of decreased competitiveness, especially vis-à-vis China.
In detail, the automobile industry and the companies that supply it reduced the number of jobs by 123,500 jobs, a decrease of 13 percent, while metal product manufacturers shed 115,600 jobs, and the mechanical engineering sector lost 64,500 jobs.
According to Ragnitz's calculations, these three sectors represent about 60 percent of the total jobs that have been cut.
