Jakarta, RakyatNTT.ID – European stock markets plunged on Monday, October 6, 2025, as French Prime Minister Sebastien Lecornu unexpectedly resigned just hours after unveiling his new cabinet.

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The sudden political upheaval in France triggered a broad sell-off across the region, ending a week-long rally in major European indices.

France’s benchmark CAC 40 index sank 1.36%, or 109.76 points, to close at 7,971.78, marking its sharpest daily drop since August. The move also snapped a six-day winning streak, reflecting investor jitters over France’s political and fiscal outlook.

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Following Lecornu’s resignation, the French 10-year bond yield surged to a one-week high, while the euro weakened against the U.S. dollar, amplifying volatility in the broader market.

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STOXX 600 and Major European Indices Slip

The pan-European STOXX 600 index edged down 0.04% to 570.24, after briefly touching a record intraday high earlier in the session. The index had climbed over 2.8% in the previous week amid optimism about monetary easing.

Regional markets mirrored the downturn:

  • Germany’s DAX fell 0.51 points to 24,378.29,
  • Britain’s FTSE 100 dipped 0.13% or 12.11 points to 9,479.14.

French Luxury and Banking Stocks Lead Declines

Concerns over France’s widening budget deficit—nearly double the EU’s 3% cap—weighed heavily on sentiment.

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Shares of French luxury brands slumped, with LVMH, EssilorLuxottica, and Hermès losing more than 2.3% each.

The banking sector was hit even harder:

  • Société Générale dropped 3.2%,
  • BNP Paribas plunged 4.2%, reflecting investor anxiety over potential fiscal instability.

Semiconductor Stocks Shine Amid Market Weakness

Amid widespread declines, semiconductor stocks provided a bright spot.

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  • BESI surged 12.4%,
  • ASML Holding gained 2%, after AMD announced a new chip supply partnership with OpenAI, boosting optimism in the tech sector.

JP Morgan Turns Bullish on Eurozone Equities

In contrast to the cautious mood, JP Morgan upgraded its view on Eurozone equities from “neutral” to “overweight”, citing attractive valuations and supportive monetary policies following months of market weakness.

Analysts noted that the correction presents “selective buying opportunities” across European blue-chip stocks, particularly in technology and industrial sectors that stand to benefit from easing financial conditions.

Political Risks Cast Shadow Over Recovery

While the broader European market remains supported by expectations of rate cuts and stable inflation, analysts warned that political instability in France could dampen investor confidence in the near term.

With the Eurozone’s largest economies facing fiscal and political pressures, traders are expected to stay defensive until clarity emerges on France’s new government direction. (*/rnc)