(Bloomberg) — French banks BNP Paribas SA and Societe Generale SA tumbled more than 5% on Monday, leading losses on the Paris market after President Emmanuel Macron called a snap election following a drubbing for his group in weekend European parliamentary voting.

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The move weighed on broader European equities, with the Stoxx 600 Index 0.6% lower as of at 9:43 a.m. in Paris, as most sectors declined. The CAC 40 Index fell as much as 2.4% in early trading, the most in almost a year. Apart from banking stocks, French construction and materials sectors also retreated sharply.

Alexandre Hezez, chief investment officer at Group Richelieu, said the banking sector is likely to suffer the most due to the potential for growing concerns around French public finances.

“One takeaway is that reforms will be hard to implement in France, and as one has seen with the downgrade of S&P, there are concerns about the sustainability of French debt,” said Hezez.

The political chaos fueled worries across the continent, with the euro slipping to its lowest in a month.

“The surprise decision to call for snap elections adds to uncertainty, particularly as France could face an EU procedure for excessive deficits later on this month,” said Vincent Juvyns, global market strategist at JPMorgan Asset Management.

Deepening political angst in Europe is likely to add fresh pressure on the euro after parliamentary votes saw leaders in France and Germany suffer losses, according to strategists.

“Already this morning one can see the euro trading lower, but I expect the spread between France’s sovereign debt and Germany to grow further,” added Juvyns.

Investors are also keeping an eye on tariffs as the European Union is expected to unveil tariffs on electric vehicles imported from China, which would restrict automotive trade, something Olaf Scholz warned against.

–With assistance from Michael Msika.

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