(CercleFinance.com) – The rise should hold until the final bell in Paris (+0.8%): the indices hesitated somewhat at the start of the morning but ‘cheap buyouts’ seem to prevail then that Wall Street is not giving up after 5 consecutive sessions of increase.
Only the US indices are digesting their spectacular gains from last week but they continue their progression for the 6th consecutive session: the S&P500 and the Nasdaq (+0.2%) are positioning themselves to establish new absolute closing records, see why no ‘intraday/closing doubles’ between now and 10 p.m.
After all, the ‘4 witches’ session will take place on Friday and the Nasdaq is posting a gain of +17%: the temptation will be strong to ride the upward trend to push Wall Street to the top to end the first half in style.
The CAC gained +0.8% towards 7,570 after having once again tested the support zone of 7,470 Points this Latin (and spent around 1 hour in negative territory since January 1).
Remember that the Parisian market fell by more than 6% last week, an unprecedented weekly decline since the end of 2022, and the differential with the Nasdaq exceeded 9%, which is ‘historic’.
The Euro-Stoxx50 regains 0.8% towards 4,880 but it is still insufficient to reconnect with the former support of 4,900 Points.
The markets’ distrust of the possible accession to power of the RN or the new Popular Front was very quickly felt on the government bond market.
The gap between the yield of ten-year French OATs (3.155%) and the German reference rate widened significantly beyond 80 basis points on Friday… before falling by -7.5 points on Monday.
The OAT relaxes by -1.5Pt (3.155%) but the Bund tightens by +6Pts to 2.415%.
Small tension, however, on the Italian construction sector with +3 points at 3.945%… and the Portuguese ’10 years’ continues to do very well with a parity score at 3.156%… identical to that of our OATs.
The fact that the jump in volatility did not remain contained in stocks, as illustrated by the collapse of the euro during Friday’s session, pushes some observers to worry about the ongoing stock market correction.
‘We can fear that the yield gap on French bonds, the decline in equities and potentially the fall of the euro will last at least until July 7,’ warns Christopher Dembik, investment strategy advisor at Pictet AM .
‘Our scenario is based more on an increase in volatility, phases of fall followed by rebounds rather than a continuous fall,’ he specifies.
According to the analyst, everything will depend on the evolution of the polls.
‘Let’s not forget that the political risk is not only French: the ruling coalition in Germany is faced with significant differences on the budget and a new government must be formed in Belgium,’ he recalls.
The outstanding question is how long this correction phase will last and whether it marks the beginning of the end of the stock market rally.
Economic indicators, particularly those relating to inflation, likely to influence the trajectory of central banks’ monetary policies should therefore continue to have a significant impact this week.
In the meantime, we have just discovered that manufacturing activity decreased slightly in June in the New York region, according to the local Fed’s ‘Empire State’ survey.
New orders remained stable, while deliveries increased slightly. Labor market conditions remained weak, with employment and hours worked continuing to contract.
The pace of increases in input and sales prices slowed slightly for a second consecutive month. Although current activity remains weak, optimism about the six-month outlook has reached its highest level in more than two years.
The only reason for satisfaction: the ‘general conditions’ index gained ten points but remained below zero, standing at -6.0.
T-Bonds deteriorated significantly this Monday with +8 Points to 4.2920%, which supports the Dollar which resumes its progression with +0.25% towards 1.0715/E, the ‘$ Index’ remains completely stable at 105 .55.
In the news of French companies, Casino announces the finalization of the consolidation of the shares making up its capital, by way of exchange of one hundred existing shares for a new one, and the effectiveness of the reduction of its capital, by way of reduction of the par value of the shares.
Thales announces that the French SIMu (Interarmy Munitions Service) has signed an order for several tens of thousands of 120mm munitions, completing the order for 15,000 munitions signed in 2023.
Thales also announced a contract with the DECEA of the Brazilian Air Force, for the acquisition of ‘all-in-one’ Ground Master multi-mission radars (GM 200 MM/A) intended to strengthen Brazil’s aerial surveillance capabilities. .
Finally, Airbus announces an order from Belgium for 15 multirole H145M helicopters intended for the army and for two aircraft of the same type, with three options, for the federal police.
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