CAC40: falls back into the red despite significant easing on OATs

(CercleFinance.com) - The Paris stock market reversed course, losing almost 0.
4% (to 7,665) against a symmetrical rise to 7,725 this morning.
The CAC 40 nevertheless posted a weekly gain of almost 3%, for an annual gain of +2%.
The Euro-Stoxx50 also fell into the red (-0.2% to 4,975), while
Wall Street reopened on a strong note, with a new all-time high for the Nasdaq-100 at 20,300Pts, and the Nasdaq Composite at 18,260 (+0.4%).

The S&P500 also set a new record at 5,548, before falling back into the red (-0.1% to 5,530).

After four weeks of intense turbulence, the Paris market seems to have calmed down since the start of the week, but remains weakened by the uncertainty surrounding the outcome of the second round of legislative elections, which will take place this Sunday.

Unless there is a major error in the polls, the political situation in France should be a little less of a marker for the CAC 40 over the next few sessions", says Christopher Dembik, investment strategy advisor at Pictet Asset Management.

"This makes sense: on average, over 60% of the sales of the major listed companies are generated abroad", he explains.

"This puts the immediate effect of the legislative elections on the business of these companies into perspective", concludes the analyst.

In a strategy note published yesterday, Morgan Stanley's strategists consider that now is a good time to buy French equities in view of a possible 'rally' of relief following Sunday's vote.

In the UK, the Labour Party's unsurprising victory in yesterday's general election, which ended 14 years of Conservative rule, was greeted without emotion by the markets: the FT-100 remained at equilibrium for a long time before starting to weaken after 3.30 pm.

The eagerly-awaited monthly employment figures for the United States once again proved to be a "non-event".
Indeed, they came out in line with expectations: the US economy generated 206,000 non-farm jobs in June, according to the Labor Department (consensus +200.000/+210,000).

The unemployment rate rose by 0.1 points to 4.1%, where economists were expecting only 4%, while the labor force participation rate stood at 62.6%, and average hourly earnings rose at an annual rate of 3.9%.
On the other hand, non-agricultural job creation for the previous 2 months was revised sharply downwards, from 165,000 to 108,000 for April and from 272,000 to 218,000 for May, for a total revision balance of -111,000.

There was little impact on US T-Bonds, which eased -3.5pts to 4.3100%, while the 30-year was virtually unchanged at 4.515% vs. 4.5200%.
Our OATs, on the other hand, were very popular on the eve of the second round of parliamentary elections, easing -5pts to 3.2300%, while Bunds eased -3.5pts to 2.5500% (the spread contracted to +68pts).

The French figures are not good, however: in May, production was down sharply month-on-month in both manufacturing (-2.7% after +0.5% in April) and industry as a whole (-2.1% after +0.6%), according to Insee's CVS-CJO data.

Furthermore, in May 2024, France's trade balance deteriorated again, according to CVS-CJO data from the customs administration, with the deficit widening to 7.99 billion euros from 7.56 billion the previous month.

Lastly, after remaining virtually unchanged in April (+0.1%), German industrial production volumes fell by 2.5% in May compared with the previous month, according to Destatis seasonally and calendar adjusted data.

Finally, Brent crude remained stable at around $87.5 a barrel.

In French company news, BASF and Engie report that they have signed a seven-year biomethane purchase agreement, under which the French energy group will supply the German chemicals giant with 2.7 to 3 terawatt-hours of biomethane over the contract period.

Renault Group says it is joining the New Energies Coalition for Transport and Logistics, intending to collaborate with industry experts to develop innovative and sustainable solutions for freight and the use of AI in the supply chain.

Finally, Technip Energies and Dutch SBM Offshore announced on Friday the creation of Ekwil, an equally-owned joint venture entirely dedicated to the emerging floating offshore wind market.

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