European markets open lower; French banks tumble after election called

LONDON — European stocks opened lower Monday as traders reacted to initial results from the EU Parliament elections which suggest far-right parties have surged in popularity.

The pan-European Stoxx 600 index was down 0.65% in early deals, as all sectors bar travel fell into the red. Construction stocks fell 1.5%.

Initial results of the EU elections show populist, far-right parties could have a bigger hand in European policymaking over the next five years.

The EU election drama was rounded off Sunday evening when French President Emmanuel Macron called snap parliamentary elections later this month after suffering a heavy defeat in the EU vote.

French banks were sharply lower following the shock news, with BNP Paribas and Societe Generale leading Stoxx losses, both down by around 6%.

Regional investors will also be looking ahead to the next U.S. inflation data on Wednesday, as well as the next meeting of the U.S. Federal Reserve. Both come after a stronger-than-expected U.S. jobs report last Friday revealed hiring and wage growth picked up in May.

That adds to the narrative the Fed doesn't have to rush to lower interest rates. Traders don't expect the Federal Open Market Committee to cut rates at its meeting this week or the next meeting in July.

Overnight, Asia-Pacific markets were mixed, with a few markets are closed for a holiday Monday, including Australia, mainland China, Hong Kong and Taiwan. Meanwhile, U.S. stock futures were little changed Sunday night after a winning week.