European markets opened in negative territory in the first session of the week, shortly after news that France’s new prime minister, Sebastian Le Corneille, resigned just weeks after being appointed to the post, plunging the country into a new political crisis.

France’s CAC 40 index is down 1.73%, while French government bond yields are rising amid renewed political uncertainty.

Among the biggest losers at the start of the session are banks, which have large government bond portfolios and are therefore most affected: BNP Paribas is down 2.2%, Crédit Agricole 2.6% and Société Générale 3.2%.

The pan-European Stoxx 600 fell 0.4% after five consecutive days of positive returns last week, including reaching an all-time high in Thursday’s session.

The U.K.’s FTSE index was down 0.20%, Germany’s DAX fell 0.29% and Italy’s FTSE MIB -0.99%.

French spreads at the highest level since January

At the same time, the risk premium on French 10-year bonds over their German counterparts rose to its highest level in nine months as Emmanuel Macron’s new “continuity government” formation raised concerns about the stability and sustainability of the government.

The French 10-year bond yield rose 6 basis points to 3.57%, pushing the spread against Bunds to 84 basis points, the highest level since January.

France in political chaos

Le Corneille, France’s fifth prime minister in less than two years, had been given a very difficult task: convincing the country – and investors – that he could unite a divided and divided parliament enough to pass the 2026 budget.

He took office in early September amid a climate of public unrest and discontent over the chaotic state of French affairs, following the failure of several successive governments to pass budgets that included spending cuts and tax increases.

The former defence minister and longtime ally of French President Emmanuel Macron resigned hours after the new government was announced on Sunday. The new government, in which most prominent figures remained in place, was due to hold its first meeting today, Monday.

Now, France is plunged into a new political crisis that will put enormous pressure on Macron, who has now formed three failed minority governments.