The Paris Stock Exchange is struggling to recover in early trading after falling nearly 5% last week. The trend looks fragile, with political risk in France after the legislative elections adding to fears of recession. Mainly technical due to the “four witches”, the surge on Wall Street on Friday should hardly support 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.
At 9:10 a.m., the Bedroom 40 yields 0.27% to 5,866.50 points.
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 apparent on the bond market where the yield on the French 10-year OAT tightened by nearly 2 basis points to 2.2130%.
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. 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.
Pfizer takes a stake in Valneva
Valneva jumped 18.5%. 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.
Airbus gains 0.7%. 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 4%. Jefferies raised its recommendation on the automaker from “hold” to “buy” and raised its price target from 22 to 40 euros.