(Boursier.com) — The slight uptick of last week is already a long way away… Over five sessions, the CAC40 stumbled by 6.3% to 7,503 points this Friday evening. The Parisian index thus suffered its biggest weekly drop since March 2022 and has now been in the red since the start of the year! Concern about the political situation in France is high after Emmanuel Macron decided to call early legislative elections. The French president dissolved the National Assembly last Sunday and announced the holding of this legislative vote in two rounds on June 30 and July 7. The move has caused political chaos and spooked investors, as the vote raises important questions about the future trajectory of the country’s public finances.
The fears of operators, strongly visible on the sovereign bond market, are shared by Bruno le Maire. The Minister of Economy and Finance warned this Friday on ‘franceinfo’ that the victory of a new left-wing alliance in the next elections would lead to the country’s exit from the European Union. “Their program is complete madness,” the leader said. “This will guarantee downgrading, mass unemployment and an exit from the European Union.”
In this context, the risk premium required by investors to hold French government bonds reached its highest level in more than four years on Friday. Despite a slight relaxation in the 10-year OAT rate (-4.5 bp to 3.118%), the “spread”, i.e. the difference between French and German 10-year borrowing costs, reached 73.5 bp (+4.5 bp) after a high of 80 bp.
Apart from this political crisis, the week was marked by the status quo of the Fed and the serial records of the S&P 500 and Nasdaq indices. Jerome Powell, head of the institution, judged that the data on consumer price inflation, published Tuesday, were going in the right direction but the Federal Reserve now plans to reduce its rates only once this year, against three drops initially expected in March. The CME Group’s FedWatch tool also highlights a probability of around 88% of a new monetary status quo on July 31, at the end of the next meeting, while the chances of seeing the Fed reduce its rates in September now reach 72%.
On the raw materials side, black gold prices rebounded by almost 5% over the week with a barrel of Brent (contract for August delivery) at $8 in London. An ounce of gold fell by 0.7% to $2,310. Finally, on the currency front, the euro is falling around $1.07 against the greenback and Bitcoin is trading around $71,100 on Coindesk.
VALUES
* No SBF120 stock managed to end the week on a positive note.
* Solutions 30 plunged by 25.5%, neglected after its exit from the SBF 120. Euronext in fact communicated last night the results of its quarterly review of the CAC family indices. The European leader in solutions for New Technologies bears the brunt of this review since it will be replaced within the index, with X-Fab, by Casino and Esso. The announced changes will be effective from Monday June 17.
* Atos fall of 24.4% after the announcement of the selection of the financial restructuring offer led by Onepoint, with the support of Butler Industries and Econocom as well as a group of financial creditors of the company. This proposal plans to convert 2.9 billion euros of the 4.8 billion euros of existing debt into shares, while maintaining the scope of the group as part of a project called “OneAtos”. In addition, Atos announced the receipt of a non-binding confirmatory offer letter from the French State regarding the potential acquisition of 100% of the division’s Advanced Computing, Mission-Critical Systems and Cybersecurity Products activities. BDS (Big Data & Cybersecurity) of the company. This offer concerns an overall enterprise value of €700 million.
* TF1 And M6 gave up 17% and 12% respectively due to fears of privatization of public broadcasting if the National Rally came to power. SébastienChenu, vice-president of the National Rally, indicated yesterday on ‘BFMTV’ that his party is considering such an option: “Marine Le Pen was the first to say that the debt had to be paid. This is the budgetary framework that we bequeath to Emmanuel Macron in which we will evolve. We will make choices in the light of the budgetary situation, but above all in the light of the interest of the French people. There is room for maneuver. super profits and the privatization of public broadcasting, that’s three billion euros.” Oddo BHF explains that “if this project were carried out, it would naturally be very negative for private actors”. It could lead to a “very sharp drop in revenues and therefore in the margins of current private groups…
* Edenred lost 12.4% to euros this Friday, bringing its losses over the week to more than 10%. Jefferies yesterday lowered its price target on the file from 40 to 38.6 euros, a low among analysts covering the file, while maintaining its ‘underperform’ rating. “We remain cautious on Edenred as we expect inflation and rate tailwinds to reverse with additional headwinds from increased competition and a change in business model,” explains the broker. He continues to believe Edenred is on track to meet its 2024 targets, supported by recent acquisitions, but believes revenues will face headwinds over time and working capital fluctuations could have a negative impact. impact on profitability and cash flows in the medium term.
* Vinci And Eiffage stumble respectively 11.4% and 14.7% while the two concession giants are dependent on the decisions of the State for the evolution of motorway prices in France but also for certain taxes like that intended to finance the ecological transition implemented at the start of the year. The National Rally could also nationalize the highways if it comes to power.
* Agricultural creditthere Societe Generale And BNP Paribas lose between 11 and 15%. The banking sector also suffered, weighed down by the uncertainty following the European elections. “The surprise decision to call early elections adds to the uncertainty, especially as France could face a European procedure for excessive deficits later this month,” Vincent Juvyns, market strategist, explains to ‘Bloomberg’ at JPMorgan Asset Management. “The banking sector risks suffering from a deterioration in the macroeconomic environment, marked by political and economic uncertainty and questions about the country’s budgetary trajectory,” affirm the AlphaValue teams. The bank on rue d’Antin was also penalized by a note from Cheuvreux which downgraded the file to ‘keep’ by targeting 74.4 euros.
* Ruby fell by 17.5% after a General Meeting which promised to be eventful after the arrival of shareholders with an activist profile at the table. Finally, the shareholders, who represented 63% of the capital and voting rights, approved all the resolutions proposed or approved by the Management, including the renewal of the mandate of the chairman of the supervisory board and the appointment of new members. The votes of shareholders do not allow us to envisage a revolution within Rubis, affirms Oddo BHF. The changes in governance are significant (ie entry to the Supervisory Board of R. Sämann, Isabelle Muller, M. Delville, B. Luc and I. Muller), but the scenario of takeover of the Board by activists is ruled out , at least until the next general meeting…
* Engie loses 11.5%, also affected by political uncertainty. The proposals of the National Rally on the control of energy prices and more particularly gas prices have had considerable influence. Sébastien Chenu, the vice-president of the National Rally, announced on CNews that in the event of victory in the legislative elections, the first measure taken would be dedicated to “purchasing power by stopping the increase in the price of gas”.