by CORENTIN CHAPRON
PARIS (Reuters) – European stock markets are expected to rise sharply on Monday the day after the first round of legislative elections in France, which reassured investors who feared greater progress by the National Rally (RN).
According to the first available indications, the Parisian CAC 40 is up 1.83% at the opening. Futures contracts on the FTSE in London suggest an opening advance of 0.21%, compared to 0.95% for the Dax in Frankfurt, and 1.54% for the EuroStoxx 50.
According to the final results, the RN and its allies The Republicans (LR) obtained 33.15% of the votes in the first round of the legislative elections in France, ahead of the New Popular Front (NFP), credited with 27.99%, and the presidential list “Together” (20.4%).
A result in line with expectations that has caused relief among investors. “The focus is now on July 7 to see whether the second round will result in an absolute majority or not. So we feel a bit uncertain, but we are relieved that the situation has not been worse,” says Fiona Cincotta, market analyst at City Index in London.
A sign of this market relief, futures contracts on the 10-year OAT are up 0.18%.
Political uncertainty is expected to gradually return over the course of the week as trends for the runoff become clearer.
By then, a succession of leading indicators will have given a clearer picture of the economies on both sides of the Atlantic.
In the Eurozone, final PMI indicators for June will be released on Monday and Wednesday, while German inflation is expected at 12:00 GMT on Monday.
Eurozone inflation will be released on Tuesday and will help investors position themselves on the future trajectory of the European Central Bank (ECB), while markets are still betting on two more rate cuts this year.
In the United States, the manufacturing ISM on Monday and services on Wednesday will shed light on the state of the American economy, while several employment indicators, including the monthly report published by the Department of Labor, will make it possible to gauge the slowdown in labor market.
VALUES TO FOLLOW:
ON WALL STREET
The New York Stock Exchange ended lower on Friday, after initial gains, following the release of PCE inflation figures and amid a tense political environment following the presidential debate.
The Dow Jones Industrial Average fell 0.11 percent, or 41.12 points, to 39,122.94. The broader Standard & Poor’s 500 lost 22.57 points, or 0.41 percent, to 5,460.30. The Nasdaq Composite index fell 126.08 points, or 0.71 percent, to 17,732.60.
In terms of values, Nike plunged 19.98% after announcing that it anticipated a drop in its turnover for the 2025 financial year.
IN ASIA
The Tokyo Stock Exchange is hesitant after the publication by the Bank of Japan of the “Tankan” survey which suggests that Japanese companies will continue to raise their prices this year, and that the central bank will have to continue its monetary tightening. The Nikkei index lost 0.06% to 39,558.06 points and the broader Topix gained 0.28% to 2,817.41 points.
Supermarket operators are moving higher after revising their earnings forecasts upwards: J.Front Retailing is up 13.56%, Takashimaya is up 9.36%.
Chinese indices hesitate as investors digest the latest US inflation figures as well as PMI indicators for June, private Caixin data suggesting a recovery in the economy, while official figures conversely suggest a continued slowdown of the activity.
The Hong Kong Hang Seng index is stable, the Shanghai SSE Composite gains 0.31%, the CSI 300 loses 0.17%.
RATE
US yields are rising as investors digest the implications of the latest PCE inflation figures released on Friday.
The 10-year Treasury yield rose 4.7 bps to 4.3902%, while the two-year rate gained 1.5 bps to 4.7348%.
CHANGES
The euro is gaining after the first round of parliamentary elections, with investors judging the results to be less worse than expected. The yen is near a 38-year low after the Japanese government published a downward revision to its first-quarter GDP figures.
The dollar declined by 0.25% against a basket of reference currencies, while the euro gained 0.38% to 1.0754 dollars, and the pound sterling 0.12% to 1.2657 dollars.
In Asia, the yen fell by 0.11% to 161 yen per dollar, the Australian dollar was stable at 0.6665 dollars.
OIL
Crude is up slightly, with markets anticipating OPEC production cuts in the third quarter and an increase in demand this summer.
Brent rose 0.46% to $85.39 a barrel, with US light crude (West Texas Intermediate, WTI) gaining 0.44% to $81.9.
(Edited by Blandine Hénault)
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