French stocks experienced a decline on Tuesday amid increasing political and policy uncertainty in the lead-up to the second-round vote set for July 7. Market analysts are anticipating a hung parliament, which could potentially result in policy stagnation for the remainder of President Macron's term through 2027.
Investors also remain cautious as they await the release of eurozone inflation data and remarks from Federal Reserve Chair Jerome Powell later today, which are expected to provide short-term market direction.
The benchmark CAC 40 index fell by 45 points, or 0.6%, settling at 7,516, following a 1.1% gain in the previous trading session.
Additionally, the U.S. dollar strengthened as Treasury yields increased, buoyed by the U.S. Supreme Court ruling affirming that presidents, including Donald Trump, possess broad immunity from prosecution.
In corporate developments, shares of Sodexo S.A., a prominent food services and facilities management company, plummeted by 5% after third-quarter sales failed to meet market expectations.
