by Diana Mandia
(Reuters) – Wall Street is expected to rise and European stock markets are up mid-session on Monday, with markets showing relief at the results of the first round of French legislative elections, with the National Rally (RN) party’s score having been less significant than investors had feared. New York index futures are signalling an opening up 0.24% for the Dow Jones and the Standard & Poor’s-500 and 0.23% for the Nasdaq. In Paris, the CAC 40 is up 1.53% at 7,593.57 points at around 1134 GMT. In Frankfurt, the Dax is up 0.36% and in London, the FTSE 100 is up 0.38%.
The EuroStoxx 50 index gained 0.92%, the FTSEurofirst 300 0.51% and the Stoxx 600 0.57%.
European stock markets, and in particular that of Paris, jumped on Monday, relieved by the results of the first round of legislative elections, despite the unprecedented victory of the far-right party.
The RN’s score, which obtained 33.15% of the votes in the first round, was less significant than feared by investors, who were worried about a possible absolute majority for Marine Le Pen’s party.
The parties’ strategies to break the RN’s momentum are in focus on Monday, against a backdrop of divisions in the presidential camp.
However, analysts say a National Assembly without an absolute RN majority remains the baseline, which gives hope for a limited increase in budget spending that would support France’s debt sustainability.
On the macroeconomic front, investors learned that manufacturing activity in the eurozone deteriorated in June as demand fell despite factory price cuts.
Another batch of data showed inflation slowing in five German states in June, suggesting that national inflation, due later on Monday, may also have decelerated.
European Central Bank (ECB) President Christine Lagarde is also due to speak later today in Sintra, Portugal, at the institution’s annual forum.
VALUES TO FOLLOW ON WALL STREET
Boeing announced Monday that it is buying Spirit AeroSystems for $4.7 billion after months of negotiations between the planemaker and one of its key suppliers, which is in serious difficulty.
VALUES IN EUROPE
In terms of values, Atos, which had opened in the green, fell 4.3% after announcing on Sunday that it had reached an agreement on the terms of its financial restructuring, which will place it in the hands of its creditors.
Air France-KLM fell by 2.4% after stating that it anticipated a negative impact on its unit revenues expected for the summer season, with operators Air France and Transavia France seeing a drop in traffic linked to the Paris Olympics.
French banks, which have been struggling since the announcement of early elections in France, are making progress on Monday after the results: Société Générale, Crédit Agricole and BNP Paribas are up between 3.7% and 5%.
RATE
The French risk premium fell on Monday, with investors relieved by the results of the first round of legislative elections, even if political uncertainties before the second round persist.
In France, the yield on the ten-year OAT gained 2.5 basis points to 3.3160%, while that of the German Bund rose 8.3 basis points to 2.5700%.
The gap between French and German 10-year sovereign bond yields stands at 74 basis points, after reaching 85.2 on Friday before the first round of French legislative elections, its highest level since July 2012.
In the United States, the yield on ten-year Treasuries rose by 6.9 basis points to 4.4119%.
CHANGES On the foreign exchange market, the European currency rose by 0.33% to 1.0748 dollars after the first round of legislative elections in France.
The dollar lost 0.20% against a basket of reference currencies.
OIL
Crude is up slightly as markets anticipate OPEC output cuts in the third quarter and rising demand this summer, although gains are limited by rising output elsewhere and political uncertainty in Europe and the United States, particularly after Joe Biden’s shaky performance in the first debate against Republican Donald Trump last Thursday.
MAIN ECONOMIC INDICATORS ON THE AGENDA FOR JULY 1:
COUNTRY GMT INDICATOR PERIOD CONSENSUS PREVIOUS
FROM 12:00 Inflation (1st estimate) June +0.2% +0.2%
– over one year +2.6% +2.8%
USA 2:00 p.m. ISM Manufacturing Index June 49.2 48.7
(Some data may be slightly out of date)
(Written by Diana Mandiá, edited by Kate Entringer)
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