Regarding the financing of the French debt, too, the tension is also palpable: the French rate for ten-year bonds is approaching 3% – around 2.90% on Tuesday –, the spread (the rate gap with Germany, Editor’s note) peaking today at 0.85 basis points.
gullWe must never exaggerate the influence of politics on the stock markets.”
But, for all that, should we expect a continuation of the decline on the Paris Stock Exchange in the coming weeks, or even a collapse following this political crisis that economic commentator Marc Fiorentino calls a “House of cards , Tuche version”? No, and for several reasons.
The fall of the star values of Paris
Firstly because the weakness of the Paris Stock Exchange in 2024 can be explained above all by the bad times experienced by some of its star stocks, particularly in the luxury sector – LVMH shares have lost almost 15%. in 2024 and Kering almost 45% – and in the automotive sector – Stellantis shares fell by some 45% in 2024.
Then because France is not (yet?) going through a major financial crisis, according to Marc Fiorentino: “We are in a general period of disinflation and falling rates in Europe, France will, of course, still borrow at higher rates than Germany, Spain or Greece but at rates that are still historically low..
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The echo is the same from Marc Eeckhout, strategist at Puilaetco: “If the government falls, there are solutions allowing us to copy, in 2025, the 2024 budget, with adjustments. It is true that the French market is the one that performs least well in Europe, but it is not mainly due to the political situation Many French companies, particularly in luxury goods, are suffering from the economic slowdown in China and the automobile sector is experiencing a very difficult time, as is also the case in Germany. The political crisis is certainly adding to this. , one layer additional difficulties but I do not believe in the scenario of a systemic crisis for all that, estimates the manager of Puilaetco.
“A few stirrings, rarely lasting”
Christopher Dembik, investment strategy advisor at Pictet AM, is also rather reassuring: “The depth and quality of French debt means that there will always be significant demand from investorshe specifies, even if he qualifies: Peaks of tension, bearish excesses on the Cac 40 and the removal of the possibility of an end-of-year rally on stocks are, however, entirely probable.”
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But from there to imagining a stock market panic, there is a step that the Pictet specialist does not take: “We should never exaggerate the influence of politics on the stock markets. This can cause some turmoil but is rarely lasting. There is no risk of shutdown and even less of a financial crisis or speculative attack on France, as has been mentioned here and there”he concludes.
