Europe’s stock markets and the euro slid Monday after far-right parties performed well in EU elections, prompting French President Emmanuel Macron to call a snap parliamentary poll and plunging the bloc into political turmoil.

Paris spearheaded the losses, tumbling by more than two percent at one point after Macron announced late Sunday that he was dissolving the National Assembly, the French Parliament’s lower house, and calling a general election.

Macron’s political gamble came after far-right parties in France, including National Rally, managed to take almost 40 percent of the vote in France’s EU poll.

The euro fell versus the dollar and pound in the wake of the news, while Frankfurt stocks slid and London also declined.

Europe’s far-right parties were winners in many places, coming out on top in France, Italy and Austria, while Germany’s AfD came second -- but still ahead of Chancellor Olaf Scholz’s SPD party -- and the hard-right also did well in the Netherlands.

“The snap election called in France has added to the uncertain tides swirling around financial markets,” said Susannah Streeter, head of money and markets at stockbroker Hargreaves Lansdown.

“Investors are assessing Macron’s gamble in attempting to reassert his authority after voters shifted en masse to the far right during the EU elections, in both France and Germany.”

France will vote for a new National Assembly on June 30, with a second round on July 7, and with the Paris Olympics set to begin on July 26.

“A sea of red has greeted traders in Europe,” added Scope Markets analyst Joshua Mahony on Monday.

“With that initial vote now less than three weeks away, it comes as no surprise to see weakness across French stocks and the euro as traders weigh up this fresh bout of uncertainty.”

Global equities were already in the doldrums as a mixed jobs report on Friday had eased worries about the US economy -- but dented hopes of Federal Reserve interest rate cuts any time soon.

With the Fed meeting this week, investors are keenly awaiting its updated “dot plot” outlook for borrowing costs, with commentators split on when the first rate cut may be coming.

Wall Street stocks got off to a lacklustre start on Monday, trading mixed ahead of Tuesday and Wednesday’s meeting of the central bank’s Federal Open Market Committee.

“While there’s no likelihood that there will be any change to rates, the FOMC’s quarterly Summary of Economic Projections will be watched closely for insight into the Fed’s thinking on future moves” in the rate, said David Morrison, senior market analyst at Trade Nation.

He noted that the CME FedWatch Tool is now pricing in just one rate cut of 0.25 percentage points, with investors split over whether this happens in September or in December, after the US presidential election.

Shares in AI chip designer Nvidia rose around 1.5 per cent on their first day of trading following a 10-for-1 split. The company topped $3 trillion in market value last week, only the third US company to reach that level.

Shares in French banks, tollroad operators and renewable energy firms fell sharply on Monday, after French President Emmanuel Macron called surprise snap elections in response to his camp’s defeat in EU elections.

Shares in BNP Paribas, France’s biggest bank, fell by close to 8% at the opening and was trading 5.3% lower at 1420 GMT, while shares in French lenders Credit Agricole and Societe Generale also suffered heavy losses.

The companies were among the biggest fallers on the pan-European STOXX 600 index, alongside French highway operators Eiffage and Vinci, which also traded around 5% lower.

Macron’s unexpected decision could hand major political power to the far-right after years on the sidelines, and put Marine Le Pen’s National Rally (RN) party in charge of the domestic agenda, including economic policy.

Among policies put forward by the party, the RN has proposed higher public spending, despite already significant levels of French debt, threatening to further raise funding costs at French banks.

The RN has also proposed to nationalise French motorways to reduce road tolls by 15%.

French gas and electricity firm Engie also fell 4.5%, heading for its biggest intraday decline in over a year, while smaller renewable energy specialist Voltalia was down 6.5%.

France’s blue-chip index CAC 40 dropped 1.6%.

“The National Rally’s programme on renewable energies is characterized by strong opposition, particularly on wind and solar energy,” said Pierre-Alexandre Ramondenc, utilities and renewables analyst at Alphavalue.

The RN plans to dismantle existing wind farms and has long opposed the construction of new installations in favour of an almost exclusive focus on nuclear energy, he added.

Despite investor concerns, industry questioned whether the RN would proceed with its stated policies. Highways are a major contributor to state finances, said a source close to ASFA, the association of French highway companies.

“The concessions are tax collectors and pay half of their revenue to the State. Calling them into question would be a dangerous signal for France’s rating,” said the person, declining to be identified on political matters.

Agencies