by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to fall on Friday and European stock markets are also falling mid-session, particularly in Paris, due to the political and economic risk linked to early legislative elections in France. New York index futures signal Wall Street opening down 0.75% for the Dow Jones, 0.52% for the Standard & Poor’s 500 and 0.32% for the Nasdaq. The American indices are consolidating after a fourth record in a row closing Thursday for S&P and Nasdaq. In Paris, around 11:30 GMT, the CAC 40 fell 1.98% to 7,555.19 points, underperforming other European markets. In Frankfurt, the Dax dropped 1.53%, weighed down in particular by automobiles. In London, the FTSE lost 0.51%.
The pan-European FTSEurofirst 300 index fell by 1.15%, the eurozone’s EuroStoxx 50 by 1.28% and the Stoxx 600 by 0.61%.
Over the whole week, the latter, the main pan-European index, fell by 1.70% at this stage.
A sign of the nervousness of the markets, the “spread”, that is to say the difference in yield between German and French ten-year bonds, rose to a seven-year high, above 80 points. base.
For Marine Mazet, rates strategist at Nomura, this risk premium will remain present until the results of the legislative elections of June 30 and July 7, which could result in a victory for far-right or far-left parties.
The French Minister of Economy and Finance, Bruno Le Maire, warned on Friday of the risk of a financial crisis in France if the union of the left or the National Rally were to win, estimating that France’s debt could not be financed.
Investors’ concerns range from the risk of a political impasse to a slowdown in reforms, including a possible downgrade of France’s credit rating, or even a “Frexit”. Jefferies strategists, however, judged the threat of a breakup of the European Union to be “exaggerated”.
In the meantime, the European banking sector (-2.72%) is suffering with, in Paris, a fall in Société Générale (-5.55%), BNP Paribas (-4.32%) and Crédit Agricole (-4.80%). %). French banks have lost nearly $19 billion (€17.8 billion) in market capitalization since last Friday’s close, according to LSEG data. VALUES TO FOLLOW AT WALL STREET
Adobe climbed 14.3% in pre-market trading thanks to the group’s increase in its annual figure forecast against a backdrop of strong demand for its publishing tools based on artificial intelligence (AI).
VALUES IN EUROPE
Atos jumped 18.32%. The group announced on Friday that it had received a non-binding letter of offer from the French State for the acquisition of its strategic activities.
Volkswagen (-0.66%), BMW (-0.84%), Renault (-2.63%) and Stellantis (-3.07%) are still in the red with the European automobile index ( -1.28%) in a context of fears of Chinese reprisals after the announcement by the European Commission of new customs duties on electric vehicles imported from China.
British property manufacturer Bellway fell 3.97% after Crest Nicholson (+12.68%) rejected a revised and unsolicited takeover offer of 650 million pounds.
H&M rose 2.01%, with UBS going from “neutral” to “buy” on the Swedish ready-to-wear group.
RATE
On the bond market, the ten-year German Bund yield fell 13.8 basis points (bps), to 2.358%, while its French equivalent is practically unchanged at 3.174%. The spread between these two bonds is now more than 80 basis points, with a widening of around 25 bps in one week. This is the largest differential on a weekly basis since 2011, a period during which the euro zone was in the grip of a sovereign debt crisis which led to multiple bailout plans for states and banks.
“It’s really hard to ignore the parallels with the 2011-2012 sovereign debt crisis,” said Justin Onuekwusi, chief investment officer at St. James’s Place.
“Looking back to this period, very similar themes are in focus: elections, sovereign debt spreads, debt sustainability, with no real sign of what will stop this momentum.” , he adds.
In the United States, the yield on ten-year US Treasury bonds fell by 3.8 basis points, to 4.2093%.
EXCHANGES The dollar advanced 0.24% on Friday against a basket of reference currencies, to a one-month high.
The euro fell 0.32%, to 1.0701 dollars, heading towards a weekly decline of 1%, the largest in two months against a backdrop of political risk in France.
“Emmanuel Macron’s party suffered a substantial setback in the European elections, and unfavorable results in the next election could exacerbate concerns about the country’s debt sustainability,” writes Erik-Jan van Harn, macro strategist at Rabobank .
The yen fell to its lowest level in more than a month on Friday, at 158.25 against the dollar, as the Bank of Japan (BoJ) left its key rates unchanged and announced that it would present a detailed recovery plan in July. reduction of its balance sheet.
OIL
The oil market is rising slightly and heading for its best weekly performance in two months, benefiting from strong projections for crude demand.
Brent advanced 0.18% to $82.90 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.04% to $78.65.
The two oil benchmarks could gain nearly 4% over the week as a whole.
(Written by Claude Chendjou, edited by Sophie Louet)
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