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Analysis

EU Elections 2024:
What do results mean for markets?

Disclaimer: This article is an educational guide to CFD trading and the financial markets and should not be considered as advice. Trading CFDs is high risk. Always ensure you understand the potential risks and rewards associated with trading before you trade.

Results

The EU Parliamentary Elections are over, and the results are in. Up until now, traders have seen markets respond calmly, with traders rotating out of more volatile assets and into safe havens. This shift follows previous trends, unsurprising when the election result conformed to polling predictions. Some key reactions included: a continued weakening of the Euro in forex markets, with EUR/GBP trending down since Monday 10th June. National stock indices in France and Germany saw sell-offs followed by recoveries. These risk-off market movements create opportunities for both long and short CFD traders.

 

What happened?

The 2024 election saw gains for the right wing ECR, EPP and ID groups, and losses for the ecologist Greens and liberal Renew group. Polls before the election were roughly correct, a key factor for market stability. Compared to projections, ECR and EPP have outperformed, with the Greens performing even worse than expected. On the other hand, ID, despite making gains, did not meet the levels predicted by pollsters.

 

European impact

At the level of the European Union, not much has changed. As predicted, the right has performed very well, and the centre-left, green and liberal groupings, poorly. The results, as reported on EuropeElects, are as follows:

  • EPP (centre-right):188 seats. An increase of 10 from the 2019 election.
  • S&D (centre-left): 136 seats. A decrease of 4 from the 2019 election.
  • Renew (centrist liberal): 81 seats. A decrease of 21 from the 2019 election.
  • ECR (right wing conservatives): 81 seats. An increase of 13 from the 2019 election.
  • Non-inscrits (parties without a group): 76 seats. An increase of 27 from the 2019 election. The Non-Inscrits include 15 Alternative for Germany seats, expelled from the ID group in May.
  • ID (right wing nationalists): 64 seats. An increase of 5 from the 2019 election.
  • Greens (environmentalist and regionalist): 54 seats. A decrease of 18 from the 2019 election.
  • Left (left wing): 40 seats. An increase of 3 from 2019.

 

Europe-wide markets: Euro and Eurostoxx

Once the results were in on Sunday night, the Euro started to sell off sharply. The EUR/USD reached its lowest value for 30 days shortly after the election. Any trouble in this market is likely to be short-lived, so traders who expect a quick recovery can potentially take positions on either side. The Eurostoxx 50 index also sold off slightly before recovering.

 

“Once the results were in on Sunday night, the Euro started to sell off sharply.”

 

National results and market response

The most significant national results came from France and Germany. Because stock indices, apart from Eurostoxx, trade on national exchanges, results must be considered in each country separately.

 

France

In France, a very strong performance by the nationalist Rassemblement National (members of the ID group) led to President Macron immediately dissolving the French parliament. This means there will be another round of elections for the French lower chamber at the end of June, where the Rassemblement National is predicted to perform very well. National market reactions in France have been strongly negative but stabilised by 11th June. The French CAC40 Index, after an initial negative shock, recovered well on Tuesday and began to trade up, despite ongoing political instability.

 

Germany

Germany saw a very strong showing by the centre-right CDU/CSU, part of the EPP parliamentary group. The nationalist AfD also performed well, coming second. The AfD were formerly part of the ID group in the European Parliament but were expelled following a series of media controversies. Current chancellor Olaf Scholz’s ruling SPD, part of the S&D group, performed poorly. The DAX German index reacted negatively to the result, opening down on 10th June, before staging a partial recovery.

 

More European volatility going forward?

Analysts are divided on whether there will be long term impacts from the European election result. Both Europe-wide and national markets responded negatively to the 2024 result, but the reaction was muted in comparison to previous disruptive events, such as the 2016 Brexit referendum. Traders can find opportunities in many places, either shorting assets they expect to perform poorly or taking out long positions. Both the current volatility and any corrections could open opportunities in both directions. As always, prudent risk management, diversification, and a careful strategy are essential.

FAQs

What do the 2024 EU election results mean for the markets?

The EU Parliamentary Elections results mean gains for right-wing groups and losses for green and liberal groups. This resulted in a mild but negative market response. Traders shifted from volatile assets to safe havens, and the Euro weakened. These results, largely in line with polling predictions, create opportunities for both long and short CFD positions.

How did national markets respond?

The key national markets of France and Germany both saw disruptive results, with a negative market reaction. In France, the nationalist Rassemblement National’s strong performance led to a sell-off in key assets, though the CAC40 Index recovered quickly. In Germany, the centre-right CDU/CSU’s success and the AfD’s strong showing caused the DAX index to drop initially, before partially recovering.

How can I trade election volatility?

The volatility that has appeared in European markets creates opportunities for both long and short positions. Traders could take short positions if they think negativity will continue or worsen or long ones if they believe the correction will outweigh this. The flexibility of CFDs allows for nimble position-taking on both sides, ideal for choppy markets.


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