Violence of October 17: the Paris Stock Exchange in sharp decline after the events of the weekend

The Paris Stock Exchange is looking grim after the violence which broke out this weekend on the sidelines of the demonstrations. In the first exchanges, the CAC 40 lost 1.22% to 7861.40 points. On Friday, the flagship index finished slightly up 0.28%, at 7,956.70 points.

The CAC 40 has had a disappointing performance: since January 1, it has fallen by 2.37%, while the European benchmark index, the Stoxx 600, is up 8.87% over the same period.

On Saturday, in the wake of the national mobilization for purchasing power, many cities were shaken by looting, destruction and riots, the scale of which stunned the country. This violence led to around 2,400 arrests and nearly a thousand police officers and gendarmes were injured, according to the authorities. According to the network of chambers of commerce and industry in France (CCI France), “more than 2,000” businesses were directly affected by the weekend’s violence. The Federation of Commerce and Distribution (FCD) estimates the cost of the damage at “several hundred million euros”.

Debt fears rekindled

“From a market point of view, the violence and demonstrations over the weekend in France are weighing on the rate gap between French and German government bonds at the start of the week,” notes Kathleen Brooks, director of research at XTB. This Monday, the gap between French and German ten-year borrowing rates, which measures investors' distrust of French debt, climbs to 145 basis points (1.45%). On Friday, it reached 137 basis points, levels not seen since 2012 and the euro zone debt crisis.

It “could widen towards 150 basis points, because political and social pressures are accumulating at the very moment when the country is trying to build an austerity budget for next year,” adds this specialist.

The events of the weekend have reignited fears about the country's debt on the eve of a vote on the budget. MEPs will vote on Tuesday on the revenues of the 2027 budget, which provides for 43 billion euros in savings.