French Market Rebounds: Budget Concessions Bring Relief Amid Political Tensions

French shares recovered on Monday after initial declines due to political turmoil. The French government made concessions to the National Rally party, aiding market recovery. The pan-European STOXX 600 index reached a three-week high, while France's budgetary negotiations and potential ECB rate adjustments influenced the market dynamics.

French shares experienced a rally on Monday, rebounding from early losses sparked by domestic political uncertainties. Investors found solace in the French government's additional budget concessions to the National Rally party, hoping to ease the turmoil.

The pan-European STOXX 600 index surged 0.6%, reaching a three-week high, while France's CAC 40 rose 0.3% after tumbling by 1% earlier. French Prime Minister Michel Barnier's last-minute decision to forgo planned cuts to medication reimbursements was seen as a strategic move to secure approval for the 2025 budget bill.

Despite the recovery, French banks slightly reduced their losses following the announcement. Meanwhile, the market speculated on potential European Central Bank rate adjustments, especially following the German DAX index hitting a new intraday high. Separately, Stellantis shares dropped significantly, along with the broader automobile sector.

(With inputs from agencies.)