Financial Markets React Sharply to Sébastien Lecornu’s Sudden Resignation

The unexpected resignation of French Prime Minister Sébastien Lecornu on the morning of October 6, 2025, sent immediate shockwaves through France's financial markets, amplifying ongoing political instability. The CAC 40 index plunged nearly 2% initially, settling at a 1.36% decline by market close, reflecting investors' surprise and heightened uncertainty.

Shares of major French banks such as BNP Paribas and Crédit Agricole fell around 3%, while luxury groups including LVMH, Kering, and Hermès decreased by over 2%, illustrating broad sectoral impacts. According to Lionel Melka, a partner at Swann Capital, American partners reacted with disbelief to the developments, highlighting the international ripple effects.

Bond markets reflected further unease as the yield on French 10-year government bonds surged to 3.61%, the highest since March, before slightly easing to 3.57%. The spread between French and German 10-year borrowing costs widened to 0.89 percentage points, the largest since January, signaling increased risk perception for France within Europe.

The euro also weakened, dropping 0.27% to 1.1710 dollars amid the political turmoil. European markets mirrored the cautious sentiment; London's FTSE 100 edged down by 0.13% after reaching a historic high earlier in the session, Milan’s market declined by 0.26%, while Frankfurt’s DAX closed stable. Across the Atlantic, US indices showed mixed responses, with the Nasdaq and S&P 500 modestly higher but the Dow Jones falling slightly.

Patrick Munnelly of Tickmill Group described Lecornu's brief tenure and resignation as making his government the most ephemeral in contemporary French history, underscoring the exceptional nature of the crisis.

Overall, this sudden political rupture has unsettled financial markets not only in France but across Europe, injecting fresh volatility and raising concerns about France's economic and political stability in the near term.