[Article publié le lundi 1er juillet à 16h40, mis à jour à 18h45]The Paris Stock Exchange is smiling again and going green again. While the CAC 40, worried by the French political situation, has fallen by almost 5% since June 1, the latter regained color this Monday by jumping 2.4% at the opening before falling back to 7,561 points at the close, at 6 p.m., up 1.09%.
After the victory of the National Rally in the first round on Sunday, followed by calls from Macron’s party to vote for the New Popular Front, investors are now betting on the scenario of a relative majority in Parliament. This reassures the markets because it means that the most radical reforms of the extreme right and the left will probably not be able to be implemented. », explains to The gallery Alexandre Baradez, analyst at the broker IG.
Legislative: the extreme confusion of the RN’s economic program
Motorways and television channels in the RN’s sights
The coming to power of the far-right party is indeed viewed negatively by investors, particularly in certain sectors of activity.
The National Rally has in fact suggested several times that it wishes to renationalize the highways – today making the fortune of the companies owning them – and privatize France Télévision, which would harm the current private channels. Moreover this Monday, around 6 p.m. in the face of the removal of this fear, TF1 rebounded by 5.21% and M6 by 4.09% when Eiffage and Vinci soared by 3.31% and 2.56% respectively after having all fallen by more than 10% since July 1.
More indirectly linked to the victory of the National Rally, the shares of the major banks saw their prices jump this Monday (+3.10% for Société Générale at the close, +2.83% for Crédit Agricole and +3.59% for BNP Paribas) after having also plunged by more or less 10% over a month. Investors fear, in fact, that the value of French government bonds, which they hold in large numbers in their portfolio, will fall sharply if the future government manages to vote for costly reforms that would cause the rate of French debt to soar.
Dissolution: France is attacked on the financial markets
A hot summer on the markets
Behind the fears surrounding the activity of certain companies and a deterioration of public finances, the drop in recent weeks is also the result of strong speculation. “ We have seen several US hedge funds go short on French stocks since the dissolution announcement » with the aim of taking advantage of political chaos, notes Christopher Dembik, economic advisor at Pictet AM. “And it seems that many of them withdrew after the result of the first round.”, analyzes the Pictet AM economist. True to the adage “ sell the rumor and buy the news », « The bulk of the correction has been made and I think that the CAC 40 should rise again in the medium term and perhaps even reach 8,000 points at the end of the year because activity is picking up again in Europe and key rates should fall again. “, says Alexandre Baradez.
The fact remains that, if the hope of a relative majority reassures investors, they could once again become frightened if future polls anticipate a scenario of full powers for Jordan Bardella’s party. Also note: “ The risk of a political blockage due to the lack of an absolute majority could harm shares if the government fails, for example, to implement measures to reduce the deficit. », Warns the IG analyst.
In this light, the summer should remain tense, with a probable hot spot during the vote on the draft amending finance law which could take place as early as July. This is where we will see if the National Rally will succeed in implementing its reforms. », concludes Christopher Dembik.
