The Paris Stock Exchange rebounded by 1.09% on Monday, a less significant movement than at the opening, with investors satisfied with the hypothesis of the absence of an absolute majority in the National Assembly.
The leading CAC 40 index gained 81.73 points to 7,561.13 points, far from compensating for the losses in June, 6.42%, the worst performance in two years. Over the year, the index is slightly back in the green (+0.24%).
But the rebound is much less obvious than at the opening, when the Paris stock market gained 2.56%.
“It is too early to declare victory” and envisage a lasting rebound in the markets, believes Vincent Juvyns, member of the strategy team at JPMorgan AM.
If “the worst scenarios” are ruled out by the markets – that is to say a large absolute majority for the New Popular Front or the National Rally – the other scenarios “are not positive from a financial point of view” however, he believes.
The best outcome for investors according to him, a renewal of the outgoing majority, was swept aside, as anticipated by the polls: the presidential camp obtained around 21% of the votes, the New Popular Front almost 28% and the National Rally and its allies more than 33%.
“Uncertainties remain high” for the second round on Sunday, underlines Nicolas Forest, investment director at Candriam.
At the end of the first round, the projections of the polling institutes anticipate at least 240 seats for Jordan Bardella’s troops and up to 295 seats, which would give him a short absolute majority (289 seats).
Around a hundred candidates from the left or the presidential majority who qualified for the second round of the legislative elections have already withdrawn on Monday, in order to counter the extreme right, according to a provisional count by AFP.
The absence of an absolute majority would partly protect the economic measures taken by Emmanuel Macron over the past seven years, but “inaction” would only be a “lesser evil” while France is facing a significant deficit and debt, Mr Juvyns emphasizes.
On the bond market, tensions have also eased a little: the gap between the German interest rate for the 10-year loan, the benchmark in Europe, and that of France has narrowed, to its lowest level in two weeks. It had reached a record since 2012 last week.
The French rate ended around 3.35%, the highest since November and up sharply from Friday, but the German rate rose much more sharply to end around 2.60%.
The gap (75 basis points) is still much higher than before the dissolution of the National Assembly (less than 50 basis points).
Rebounds
French stocks, which suffered from political instability after the announcement of the dissolution of the National Assembly on June 9, have rebounded.
On the banking side, Société Générale gained 3.10% to 22.60 euros, Crédit Agricole 2.83% to 13.10 euros and BNP Paribas 3.59% to 61.67 euros.
Other companies that have been struggling since the dissolution due to concerns about nationalisation or stricter regulation of certain activities were also up: Vinci gained 2.56% to 100.90 euros, Eiffage 3.31% to 88.60 euros, TF1 5.21% to 7.67 euros and Engie 2.96% to 13.73 euros.
New buyers for Atos
Atos’ creditors and banks agreed on Sunday to take over and save the troubled French IT giant themselves. The stock opened up more than 20%, but closed in the red (-0.34% at 98 cents). The deal includes a capital increase of 233 million euros and a debt reduction of 3.1 billion euros.
Airbus and Boeing acquire AeroSystems
Twenty years after separating from it, Boeing will buy its subcontractor Spirit AeroSystems, overwhelmed by production problems, but part of the activities will be taken over by Airbus (+2.64% to 131.64 euros), announced Monday the two major competitors in the global aeronautics sector.
Euronext CAC40
