European stocks rise as tech rallies

French stocks dropped 1.4%, marking their sharpest one-day decline since August and snapping a six-day winning streak, after French Prime Minister Sebastien Lecornu abruptly resigned

European stocks recouped their losses on Monday after the fall triggered by the unexpected resignation of French Prime Minister Sebastien Lecornu was offset by a rally in semiconductor stocks following AMD’s chip supply deal with OpenAI.

The pan-European STOXX 600 closed flat. The index briefly hit an intraday record high on Monday after climbing more than 2.8% last week.

French stocks dropped 1.4%, marking their sharpest one-day decline since August and snapping a six-day winning streak, after Lecornu abruptly resigned just hours after unveiling his new cabinet.

French bond yields rose, with the 10-year note hitting a one-week high, while the euro weakened.

Investors remain wary of France’s fiscal health, as the country holds the euro zone’s largest budget deficit – nearly double the EU’s 3% threshold.

French luxury stocks took a hit, with LVMH, EssilorLuxottica and Hermes dropping 2.3% each.

Banks also bore the brunt, with SocGen and BNP Paribas slumping 3.2% and 4.2% respectively.

Mid-cap French stocks shed 1.7%.

Political instability has plagued France since President Emmanuel Macron’s 2022 re-election, with no party commanding a parliamentary majority.

The political turmoil in France isn’t new. It’s just another confirmation of the fragility within the political system in France and how hard it is for them to be able to maintain a government, said Daniela Hathorn, senior market analyst at Capital.com.

French blue-chips have lagged European peers so far this year, up over 7% compared to double-digit gains seen in some countries.

On the European markets more broadly, oil and gas gained 1.3% tracking higher oil prices after OPEC+’s planned production rise for November was more modest than expected.

European semiconductor companies gained after AMD’s chip supply deal with OpenAI. BESI climbed 12.4% while ASML added 2%.