Following a surprise left-wing surge in France's recent elections, French shares and bond prices initially fell but later recovered as investors reacted to the prospect of a hung parliament. With no single group securing a working majority, traders grappled with relief over the absence of a far-right victory, concern about a more powerful left, and uncertainty about the future government. The CAC40 index reversed its early decline, and major French banks like Societe Generale and BNP Paribas saw slight gains after an initial drop. Bond markets also showed hesitancy in pricing the outcome, with the spread between French and German bond yields narrowing. Although the anti-far-right parties received significant support, the divided assembly raises questions about the implementation of policies and progressive reforms. With Prime Minister Gabriel Attal set to resign, the focus now shifts to who will be France's next leader, a decision that could impact financial markets significantly. Despite the uncertainty, markets are hopeful that a centrist technocratic premier will be installed to provide stability and address economic concerns.