According to Bloomberg data, the total value of companies listed on the London Stock Exchange (LSE) reached $3.18 trillion on Monday, surpassing the $3.13 trillion total value of companies listed in Paris. While both valuations have fluctuated and remain close, analysts consider this a significant milestone. They attribute the slump in the French market to election-related uncertainty, whereas the UK market is recovering after years of underperformance.
The LSE had been Europe’s largest stock market for many years until November 2022, when it was overtaken. Analysts at the time blamed the LSE’s decline on the repercussions of former Prime Minister Liz Truss’s mini-Budget, a weak pound, recession fears, and Brexit. In 2016, the LSE was valued about $1.4 trillion more than its Parisian counterpart.
Analysts note that market investors generally dislike uncertainty, and there are many questions regarding the implications of France’s upcoming election. President Emmanuel Macron called the snap election earlier this month after Marine Le Pen’s right-wing National Rally won the European elections.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, pointed out that the National Rally’s manifesto includes “unfunded spending.” She noted, “They are not so focused about winning over the market.” Financial markets often react negatively when funding sources for government pledges are unclear, as this impacts bond values. If investors doubt the feasibility of a government’s policies, bond yields tend to rise, which can hurt the value of listed companies. High bond yields make government bonds more attractive compared to investing in company shares.
