The Paris Stock Exchange is picking up a few fractions after suffering its biggest drop since early March last week. The trend is weakened by the political risk in France after the legislative elections, which comes on top of the fears of recession induced by the surge in inflation. Mainly technical due to the “four witches”, the upsurge in Wall Street on Friday should have little impact on the market, especially since the American market is closed on Monday for the first celebration of Juneteenth, commemorating the abolition of slavery at the federal level.
Shortly after 10 a.m., the Bedroom 40 takes 0.21% to 5,895.17 points in a limited business volume of 360 million euros.
Emmanuel Macron’s supporters only obtained a relative majority in the National Assembly. Together, which includes Renaissance, Modem and Horizon, only won 245 seats in the second round of legislative elections on Sunday, against the 289 required to secure an absolute majority out of a total of 577 deputies.
Jerome Powell facing Congress
The New Popular Ecologist and Solidarity Union (Nupes), the coalition formed by the Insoumis, the Socialist Party, the Communist Party and the environmentalists of EELV, won 135 seats, thus becoming the first opposition force, but the real surprise comes from the 89 seats obtained by the National Rally, its best score in a legislative election since 1988, without the help of proportional representation.
Emmanuel Macron will therefore have to deal with a fragmented National Assembly to pass his bills, with the need to negotiate dearly and on a case-by-case basis with his supporters to avoid political paralysis.
This risk is reflected in the bond market where the yield on the French 10-year OAT tightened by nearly 4 basis points to 2.2350%.
The specter of sustained inflation will also be on everyone’s mind this week with Jerome Powell’s semi-annual hearing on monetary policy before both houses of Congress on Wednesday and Thursday. He should on this occasion repeat that the Federal Reserve will do everything to fight inflation, which reached a record 8.6% over one year in May. The Federal Reserve raised the fund funds rate by 75 basis points last Thursday, the sharpest tightening since 1994.
Fed Governor Christopher Waller said he will support a 75 basis point hike in the Fed funds rate in July if the next economic indicators turn out to be in line with his expectations. Cleveland Fed President Loretta Mester believes that the risk of recession is increasing and that it will take several years to reach the 2% inflation target.
Valneva boosted by Pfizer, Saint-Gobain falls with Kingspan
Valneva jumped 13.7%. The pharmaceutical group has announced that Pfizer will acquire 8.1% of its capital for 90.5 million euros. The investment will be made at a price of 9.49 euros per share, by the ” through a reserved capital increase intended to strengthen the strategic partnership concluded between the two companies on Lyme disease the company said in a statement.
Biggest drop in the Cac 40, Saint Gobain loose 4.7% in the wake of the fall of almost 12% of the Irish Kingspan in London. The insulation materials specialist announced that its markets have deteriorated over the past two months with a significant deterioration in order volumes compared to the same period last year.
Airbus gains 0.8%. Air India plans to order up to 300 single-aisle jets, Bloomberg reports, citing people familiar with the matter. The Indian company could order aircraft from the Airbus A320 neo family or Boeing 737 Max, or choose to place an order mixing these two families, adds the agency.
Renault increased by 6.1%. Jefferies raised its recommendation on the automaker from “hold” to “buy” and raised its price target from 22 to 40 euros. In its wake, Valeo and Faurecia rose by more than 4%.