Europe open: France's CAC rises despite fall of Barnier government

(Sharecast News) - European shares opened higher on Thursday, despite the collapse of the French government overnight. The pan-regional Stoxx 600 index was up 0.32% to 519.66 in early deals. France's CAC 40 was up 0.58% after extreme right lawmakers combined with left-wing rivals to depose Prime Minister Michel Barnier's minority government in a no-confidence vote over his controversial Budget.

Barnier was widely expected to resign on Thursday after only three months in office, making him the shortest serving prime minister in French history. He was brought down for forcing through his austerity measures without a parliamentary a vote. The draft budget contained €60bn in savings to cut the country's deficit.

"The fact that the political right and left ousted Barnier highlights the risk that they may jointly undo some of (President Emmanuel) Macron's previous pro-growth reforms, going beyond the partial reversal of Macron's corporate tax cuts which Barnier had already proposed," said Berenberg chief economist Holger Schmieding.

"Moreover, the reluctance to return to a sustainable fiscal policy now means that the correction will have to be even starker at some time in the future even if the EU now accepts further French fiscal slippage for a while, as seems likely."

"Instead of outperforming the Eurozone average, as France had done in 2023 and 2024, we expect France to fall significantly short of eurozone average growth in the next two years - and possibly beyond. We lower our calls for the gain in French real GDP from 0.7% to 0.5% for 2025, from 1.2% to 1.0% in 2026, and from 1.3% to 1.2% in 2027 respectively."

In equity news Aurubis shares spiked as the German ferrous metals supplier and copper recycler post upbeat annual earnings amid a volatile market.

Kit meal producer HelloFresh surged after Jefferies upgrade the stock to 'buy' from 'hold' and raised its target price to €16.50 euros from €7.50.

Reporting by Frank Prenesti for Sharecast.com