“European indices should attempt a technical rebound after last week’s storm”, but “should remain nervous”, comments John Plassard, investment specialist for Mirabaud.
The storm is already fading? The Paris Stock Exchange is up on Monday after seeing all its annual gains evaporate at the end of the previous week, in a market which should try to rebound after having experienced its worst week since March 2022, due to political uncertainties In France. The CAC 40 futures contract gained 0.51% around 9:05 a.m. The Frankfurt Stock Exchange gained 0.50% and that of London 0.19%. On Friday, the index fell 2.66% to 7,503.27 points, the lowest since January 25. The previous week was marked by the worst weekly fall in the CAC 40 (-6.23%) since March 2022, at the time of the Russian invasion of Ukraine, and the index saw all cumulative gains since January 1st. evaporate, serving as an exception among other European indices.
“European indices should attempt a technical rebound Monday morning after last week’s storm”however they “should remain nervous depending on political developments in Europe and more particularly in France”, comments John Plassard, investment specialist for Mirabaud. The dissolution of the National Assembly in France announced by President Emmanuel Macron on June 9, in reaction to the strong rise of the far right during the European elections, was followed by a week of twists and turns and political confusion with alliances and the nomination of candidates decided urgently. The two rounds of early legislative elections will be held on June 30 and July 7.
In the wake of its victory in the European elections, the far-right party, National Rally, is entering this campaign at the top of the polls, given around 30% of the votes. “As conservative policies never bode well for investment prospects, French markets are likely to continue to be under pressure this week”, underlines Ipek Ozkardeskaya, analyst at Swissquote Bank. On the bond market, “the gap between French and German 10-year yields has crossed the 80 basis point mark, a record since the debt crisis which hit the euro zone more than ten years ago”she continued.
This difference between the two rates – or “spread” – is an indicator measuring investor confidence in France and its long-term economic prospects. “We can fear that the yield gap on French bonds, the fall in equities and potentially the fall of the euro will last at least until July 7”, estimates Christopher Dembik, investment advisor at Pictet AM. On the foreign exchange market on Friday, the euro fell to 1.0668 dollars, the lowest in a month and a half. Finally, the market will digest mixed Chinese economic data that was published overnight from Sunday to Monday: retail sales increased in May, but industrial production growth slowed, a sign of an uneven recovery in the second Mondial economy.
Read alsoParis Stock Exchange: dark week for the CAC 40 which erases all its gains since the start of the year
Alstom: the French railway manufacturer announced on Friday, after the close of the stock market, that it had won a contract worth “around 430 million euros” to supply trains and ensure maintenance of one of the London Underground lines. Safran: the aeronautical engine and equipment manufacturer won an auction to acquire the French SME Preligens, which helps the defense and intelligence sectors interpret satellite images using artificial intelligence, the newspaper La Tribune said on Saturday.
