(BFM Bourse) – The index opened very sharply this Monday following the first round of the legislative elections. The hypothesis of a National Assembly without an absolute majority seems to be gaining ground, which relieves investors.
After the nervousness, a first sigh of relief. The Paris Stock Exchange opened this Monday with a very sharp rise following the first round of the legislative elections in France.
The CAC 40 thus gained 2.6% in early trading to 7,671.52 points.
The dissolution of the National Assembly by Emmanuel Macron on June 9 caused significant political uncertainty, which the market inherently hates. Since the announcement of this decision, the CAC 40 had lost more than 500 points and 6.5%.
But investors are putting the risk into perspective after the first-round results published on Sunday evening. “The first round of the French elections may have given the far right a slightly less convincing victory than the latest polls suggested, and with other parties now looking set to form alliances in the second round, this should further reduce the far right’s chances of securing an absolute majority,” in the Assembly, Deutsche Bank points out.
A relief”
“Traders are feeling a little more confident today with the announcement of the first round of early legislative elections in France,” notes Naeem Aslam of Zaye Capital.
The National Rally came out on top in the vote with 33.14%, ahead of the New Popular Front (27.99%) and Ensemble (20.04%), according to figures from the Ministry of the Interior. But the projections – which should be taken with caution due to the uncertainty linked to the presence of a very large number of three-way races in the second round – in seats only give the National Rally (RN) an absolute majority at the upper end.
The parties have also announced withdrawals to prevent the RN from obtaining an absolute majority. The leader of La France insoumise, Jean-Luc Mélenchon, affirmed that his party would withdraw its candidates in the constituencies where it came in third position and where the National Rally (RN) is in the lead for the second round. Prime Minister Gabriel Attal, for his part, declared that the Ensemble candidates who came third would withdraw for the second round. The head of government spoke of “the withdrawal of our candidates whose retention would have resulted in the election of a National Rally deputy over another candidate who, like us, defends the values of the Republic.”
This configuration reinforces the hypothesis of a National Assembly without a majority the day after the second round, next Sunday.
The scenario of a National Assembly is seen “as a relief”, explained Christophe Barraud of Monaco SAM on Twitter.
Xavier Chapard, strategist at LBPAM, explains that the scenario that the market had already integrated, namely that of an Assembly “without a clear majority”, is “the most likely”. This scenario “justifies a persistent but limited risk premium”, he adds.
On the value side, the sectors which had been most penalized by the dissolution are rebounding. This is the case for banks: Société Générale takes 7.3%, Crédit Agricole SA takes 4.8% and BNP Paribas gains 4.5%. Just like highway concessionaires. Vinci gained 4.7% and Eiffage 5%.
On the debt market, tensions are easing. The yield on the French 10-year bond lost 1 basis point (0.01 percentage point) while that on the German security of the same maturity gained 5 points. In other words, the rate difference (the “spread”) between France and Germany is narrowing.
On the exchange rate, the euro gained 0.5% against the dollar to 1.0763 dollars.
Julien Marion – ©2024 BFM Bourse
