by Claude Chendjou
PARIS (Reuters) – European stock markets, apart from London, rebounded on Monday at the end of an indecisive session after the strong turbulence of last week linked to the announcement of early legislative elections in France.
In Paris, the CAC 40 ended with a gain of 0.91% to 7,571.57 points after losing more than 6% last week. The German Dax advanced 0.4%. The British Footsie, penalized by the “utilities” compartment (community services), lost 0.06%.
The EuroStoxx 50 index increased by 0.86% and the FTSEurofirst 300 by 0.15%. The Stoxx 600 gained 0.09% after a loss of 2.4% last week, the largest on a weekly basis since October.
At the close in Europe, the Dow Jones was stable (-0.01%), while the Standard & Poor’s 500 gained 0.16% and the Nasdaq 0.15%, the latter two indices consolidating their recent records. The increase is fueled by the new technologies sector (+0.42%), including Nvidia which reached a historic high of $133.73 and Apple (1.85%), the world’s largest market capitalization.
In the euro zone, where the indices were shaken last week by the announcement of early legislative elections in France which could lead to a victory for extremist parties, budgetary concerns in France have partly eased. This allowed a rise in the euro, a drop in the volatility index on the EuroStoxx, to 19.91 points, and a reduction in the spread (differential) between German and French sovereign rates.
This relief could, however, be short-lived, at least until the results of the legislative elections on July 7.
“A French challenge to budgetary agreements in the euro zone would be problematic and have considerable implications,” JPMorgan analysts warned. “At this stage, the situation as the first round approaches is still very undecided,” added the intermediary.
On a sectoral level, the European banking index, which lost more than 8% last week, rebounded by 1.26%, while that of basic resources (-0.74%) suffered from weakness of Chinese industrial production in May.
VALUES IN EUROPE
Air France-KLM dropped 2.24% as the airline said on Monday that it did not expect an increase in traffic during the Olympic Games, with some tourists likely to avoid Paris, while in China the growth of Traffic remains slow.
Adidas lost 2.58% after information from the Financial Times on the opening of an investigation for corruption in China against the German sports equipment manufacturer.
ING advanced 2.84%, the Dutch group having announced that it was targeting revenue growth of 4% to 5% per year until 2027.
Topdanmark soared 22.24% after an offer from the Finnish insurer Sampo (-1.22%) which valued the Danish group at $4.7 billion.
TODAY’S INDICATORS
Eurozone labor costs rose sharply in the January-March period, by 5.1%, according to the Statistical Office of the European Union.
Manufacturing activity in the New York region fell less sharply than expected in June, with the Empire State index at -6.00 after -15.6 in May, the survey shows of the regional branch of the Federal Reserve.
CHANGES
The dollar fell 0.06% on Monday but reached its highest level since May 2 against a basket of reference currencies, mainly due to the weakness of the euro, in a context of political risk in France.
As the stock markets closed in Europe, the single European currency recovered, by 0.18% to $1.0719, after a decline of 0.88% last week. Marine Le Pen, whose party is expected to win the legislative elections, worked to allay fears by affirming that she did not want Emmanuel Macron to resign and was “respectful of institutions”, in an interview with Le Figaro.
RATE
The yield on the ten-year German Bund, benchmark for the euro zone, ended up 5.6 basis points (bps), at 2.416%, while the gap with the French OAT of the same maturity fell to 74.53 bps against a differential of more than 82 bps on Friday.
The chief economist of the European Central Bank (ECB), Philip Lane, on Monday downplayed the need for intervention on French bonds and Christine Lagarde said she was attentive to the proper functioning of financial markets.
In the United States, the yield on ten-year Treasury bills, which fell 2.3 basis points on Friday, rose 7.6 points to 4.2887%, driven in particular by the publication of the Empire State index and pending intervention from several Fed officials.
OIL
The prospect of an increase in crude demand for the summer period in the United States offsets the mixed indicators from China: Brent gained 0.85% to 83.32 dollars per barrel and American light crude (West Texas Intermediate, WTI) advances 1.1% to $79.31.
(Written by Claude Chendjou, edited by Bertrand Boucey)
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