CAC 40 up after first spherical of legislative elections | EUROtoday

Get real time updates directly on you device, subscribe now.

After the shocks that adopted the announcement of the dissolution of the National Assembly within the wake of the European elections of June 9, the outcomes of the primary spherical of the French legislative elections had been greeted with reduction by the monetary markets on Monday 1er July.

Read additionally | Article reserved for our subscribers Results of the 2024 legislative elections: what to recollect from the primary spherical

At the beginning of the session on the Paris Stock Exchange, the CAC 40 index gained 2.7%, erasing a part of its heavy losses from June, a decline of 6.4% which marks the worst month-to-month efficiency of the French inventory marketplace for two years and has pushed the efficiency of French shares into the purple since 1er January.

On the overseas trade market, the euro appreciated on the similar time by 0.5% in opposition to the greenback to 1.0768 and on the federal government bond market, which may be very delicate to political uncertainties, the hole between the yield on French and German ten-year bonds fell to 73 foundation factors.

This hole or “spread”, a barometer of investor mistrust in direction of France's signature on the debt market, rose to 86 factors on Friday, its highest stage since 2012, whereas it was lower than 50 factors earlier than the announcement of the dissolution of the National Assembly on June 9.

An “Italian” state of affairs

The leisure of this Monday morning has a number of causes. Some traders take into account that the outcomes of the primary spherical of legislative elections make it attainable to rule out each the speculation of a authorities coming from the New Popular Front and that of a giant victory for the National Rally within the occasion that the withdrawals of the second flip can be unfavorable to the intense proper.

Read additionally | Article reserved for our subscribers Legislative 2024: “The solutions proposed to the French are unsuitable for the challenges the country must face”

“The most likely scenario is that of a Parliament without an absolute majority, which reduces extreme risks but which leaves France in a complicated political situation”says Xavier Chapard, strategist at LBP AM, in a word.

But above all, the markets imagine in an “Italian” state of affairs, in reference to the federal government of Giorgia Meloni shaped in October 2022, dominated by the intense proper, however anxious to protect its budgetary credibility. Or, as one banker sums it up, “economically domesticated”.

Read additionally | Article reserved for our subscribers Giorgia Meloni's technique of uniting the rights in Italy, a mannequin for the RN

However, the rebound that started on Monday might be fragile. Because for a lot of analysts, regardless of the outcomes of the second spherical and their institutional penalties, it’s unlikely that the markets, beginning with the bond market, will shortly return to the degrees at which they had been evolving earlier than the dissolution, as a result of an absence of certainty concerning the composition of the longer term authorities and its first selections.

You have 42.92% of this text left to learn. The relaxation is reserved for subscribers.