Euro markets react to Macron's snap election. Why it matters

French President Emmanuel Macron has called for a snap election, a gamble that puts France's Parliament seats and his own presidency at risk. While Macron is betting all of his chips on this one hand, European markets (^FTSE, ^GDAXI, ^FCHI, FTSEMIB.MI, ^IBEX) are reacting negatively to this news.

Yahoo Finance's Madison Mills explains what this all means for the euro and why it should matter to Americans heading into the US presidential elections season.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Luke Carberry Mogan.

Video Transcript

All political uncertainty is rippling across Europe after a strong showing from far right parties in Sunday's European elections prompted French President Manuel Macron to call a snap vote.

The Euro and French markets selling off on the news.

Here to explain is Yahoo Finance's Madison Mills, Madison.

Thanks Brian.

So just to explain that snap election piece that you just mentioned there, that is a tool at Macron's disposal here, he is able to call for a complete dissolution of parliament and a revote essentially, this means that all of those seats are up for grabs including his own.

The final tool at his disposal here given that he lost this election.

But the reason that we're seeing such a sell off in the European markets particularly in France today is because that piece, the snap vote was not priced in.

If you take a look across all European markets were seen moves to the downside.

The C 40 here was down.

This is the index in France.

This was down over 2% earlier this morning off of this news.

Now pairing those losses back just a little bit here as we move into the day, the Euro dollar at the lowest level in a month off of this news.

And again, the reason we're seeing this bigger sell off is because yes, these election results were anticipated, right.

We're seeing the whole of Europe moving further into the far, right when it comes to the candidates that we are seeing win these elections, but the snap vote was not priced in.

And the reason I wanted to talk about this today is because this is a point that we can utilize when sussing out investor opportunities for the US elections as well.

It's not enough to have a take on whether or not Trump or Biden is going to win this election.

You don't know what's going to happen that you don't know what the policy position is going to be.

You don't know what those 1st 10 days in office are going to look like for either candidate once they're in the White House.

This exact move that we saw from Macron today is the thing that investors here in the States should be watching and should be concerned about because that is what's very difficult to price.

And now we know that the upcoming elections in France are going to be on the 30th of June and July 7th.

So the party that won over the past 24 hours, he is going to have a little bit of time in office to see how they're doing.

The population is going to be able to see how they're doing before that vote.

That is what Macron is hoping will allow him to stay in power.

He says that he has faith in the French people with regards to that.

But as the entire continent is moving further, right, it does put a lot of risk on the table for the parliament as a whole, which investors and of course politicians like him had not anticipated.

All right, Matty, great stuff.

Thanks so much for breaking that down and exactly why something like this really matters here to our audience.