Paris (awp/afp) – World stock markets are up on Friday, ahead of an American inflation index, except the Paris Stock Exchange, more nervous as the first round of the legislative elections in France approaches and while the gap between the French and German borrowing rate continues to widen.
In Europe at around 1:00 p.m., the Frankfurt Stock Exchange gained 0.65%, London 0.59% and Milan 0.41%. Only the Paris Stock Exchange was in the red (-0.27%). At 1:25 p.m., the SMI gained 0.09%.
On the bond market, France’s 10-year borrowing rate continued to increase, at 3.33%, reaching its highest since November 6. It closed at 3.27% the day before. The rate at the same maturity reached 2.47%, compared to 2.45%.
The gap between these two rates, which is an indicator of market confidence in France, suddenly increased under the effect of the political instability caused by the surprise announcement of the dissolution of the National Assembly.
The market already has little confidence in France’s ability to bring its public deficit below the threshold of 3% of its GDP by 2027, and fears the implementation of expensive economic programs following the legislative elections.
The first round “will give us an idea of the possible outcomes,” Deutsche Bank analysts commented.
But on Thursday evening, the situation seemed frozen in the polls, which gave the National Rally (far right) the clear favorite with 36% of voting intentions, ahead of the left-wing New Popular Front alliance which grabbed half a point at 29%, according to the daily Ifop-Fiducial barometer for LCI, Le Figaro and Sud Radio.
Under the banner “Together for the Republic”, the Macronist camp is still behind at 21%, while the traditional right (The Republicans) is relegated to 6.5%.
Furthermore, “a higher rate gap” between France and Germany means a lesser appetite for the euro,” explains Ipek Ozkardeskaya, analyst at Swissquote Bank.
On the foreign exchange market, the single European currency was however stable (+0.03%) against the greenback, at 1.0707 dollars.
On the agenda for the session, investors are digesting European inflation indices for the month of June. Inflation started to fall again in June in France, to 2.1% over one year; it slowed in Spain, to 3.4% over one year; and it stagnated in Italy, at 0.8% over one year.
But it is above all the American PCE price index for May, which must be published before the opening of the New York Stock Exchange, which is the most anticipated. The inflation index most followed by the American central bank (Fed), it is expected to remain stable over one month, after having increased by 0.3% in April.
In the meantime, futures contracts for the three main Wall Street indices pointed to a higher opening: the Nasdaq gained 0.42%, the S&P 500 0.35% and the Dow Jones gained 0.09%.
JD Sports driven by Nike
The British sports clothing chain JD Sports Fashion fell by 4.63% in London, weighed down by its partnership with the American sports equipment manufacturer Nike, which published a turnover on Thursday that was down and below expectations.
In New York, Nike fell nearly 15% in electronic trading before the market opened.
Oil is progressing
Oil prices were moving in the green, driven by rising geopolitical tensions and the prospect of a slowdown in US inflation.
At around 12:50, the price of a barrel of North Sea Brent, for delivery in August, which is the last day of trading, rose by 0.75% to $87.04. Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in the same month, rose by 0.76% to $82.36.
Bitcoin was stable (+0.04%) at $61,441.
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