by CORENTIN CHAPRON
PARIS (Reuters) – European stock markets are expected to rise sharply on Monday, the day after the first round of legislative elections in France, which reassured investors who feared a more marked progression of the National Rally (RN).
According to the first available indications, the Parisian CAC 40 would be up 1.83% at the opening. Futures contracts on the FTSE in London suggest an advance at the opening of 0.21%, against 0.95% for the Dax in Frankfurt, and 1.54% for the EuroStoxx 50.
According to the final results, the RN and its allies Les Républicains (LR) obtained 33.15% of the votes in the first round of the legislative elections in France, ahead of the New Popular Front (NFP), credited with 27.99%, and the presidential list “Ensemble” (20.4%).
A result in line with expectations which brings relief among investors. “The focus now shifts to July 7 to see whether the second round results in an absolute majority or not. So we feel like we are in a bit of uncertainty, but we are relieved that the situation hasn’t been worse,” says Fiona Cincotta, market analyst at City Index in London.
As a sign of this relief in the markets, futures contracts on the 10-year OAT are up 0.18%.
Political uncertainty is expected to gradually return over the course of the week as trends for the runoff become clearer.
By then, a succession of leading indicators will have given a clearer picture of the economies on both sides of the Atlantic.
In the eurozone, the final PMI indicators for June will be published on Monday and Wednesday, while German inflation is expected at 12:00 GMT on Monday.
Eurozone inflation will be released on Tuesday and will help investors position themselves on the future trajectory of the European Central Bank (ECB), while markets are still betting on two more rate cuts this year.
In the United States, the manufacturing ISM on Monday and services on Wednesday will shed light on the state of the American economy, while several employment indicators, including the monthly report published by the Department of Labor, will make it possible to gauge the slowdown in labor market.
VALUES TO FOLLOW:
AT WALL STREET
The New York Stock Exchange ended down on Friday, after initial gains, following the publication of PCE inflation figures and in a tense political context following the presidential debate.
The Dow Jones Industrial Average fell 0.11 percent, or 41.12 points, to 39,122.94. The broader Standard & Poor’s 500 lost 22.57 points, or 0.41 percent, to 5,460.30. The Nasdaq Composite index fell 126.08 points, or 0.71 percent, to 17,732.60.
In terms of values, Nike plunged 19.98% after announcing that it anticipated a drop in its turnover for the 2025 financial year.
IN ASIA
The Tokyo Stock Exchange is hesitant after the publication by the Bank of Japan of the “Tankan” survey which suggests that Japanese companies will continue to raise their prices this year, and that the central bank will have to continue its monetary tightening. The Nikkei index lost 0.06% to 39,558.06 points and the broader Topix gained 0.28% to 2,817.41 points.
Supermarket operators are progressing after revising their earnings projections upwards: J.Front Retailing jumped 13.56%, Takashimaya 9.36%.
Chinese indices hesitate as investors digest the latest US inflation figures as well as PMI indicators for June, private Caixin data suggesting a recovery in the economy, while official figures conversely suggest a continued slowdown of the activity.
Hong Kong’s Hang Seng Index is stable, Shanghai’s SSE Composite is up 0.31%, and the CSI 300 is down 0.17%.
RATE
US yields are rising as investors digest the implications of the latest PCE inflation figures released on Friday.
The 10-year Treasury yield rose 4.7 bps to 4.3902%, while the two-year rate gained 1.5 bps to 4.7348%.
CHANGES
The euro rose after the first round of legislative elections, with investors judging the results to be less worse than expected. The yen is near its lowest point in 38 years after the Japanese government released a downward revision to first-quarter GDP figures.
The dollar declined by 0.25% against a basket of reference currencies, while the euro gained 0.38% to 1.0754 dollars, and the pound sterling 0.12% to 1.2657 dollars.
In Asia, the yen fell by 0.11% to 161 yen per dollar, the Australian dollar was stable at 0.6665 dollars.
OIL
Crude is up slightly as markets anticipate OPEC production cuts in the third quarter and higher demand this summer.
Brent rose 0.46% to $85.39 a barrel, with US light crude (West Texas Intermediate, WTI) gaining 0.44% to $81.9.
(Edited by Blandine Hénault)
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