The Paris Bourse hesitated a little at the start of the morning, but 'cheap buybacks' seem to be winning the day as Wall Street holds firm after 5 consecutive sessions of gains (-0.1 to -0.2% decline for the S&P500 and near-stability for the Nasdaq at 17.690 after +3% last week).

The CAC is gaining +0.6% towards 7,550 after testing the 7,470Pts support zone once again (and spending around 1 hour in negative territory since January 1st).
It should be remembered that the Paris market fell by over 6% last week, a weekly decline unseen since the end of 2022, and the differential with the Nasdaq exceeded 9%, which is "historic".

The Euro-Stoxx50 has recovered 0.8%, but this is still not enough to regain the former 4,900-pt support level.
The euphoria of the beginning of the year has been replaced by a sudden correction and a brutal reawakening of volatility, which took many investors by surprise.

The market's mistrust of the possibility of the RN or the new Front Populaire coming to power was quickly felt on the government bond market.

The spread between the French ten-year OAT yield (3.15%) and the German benchmark rate (2.39%) widened sharply to over 80 basis points on Friday.... before falling back by -7.5Pts on Monday.
The OAT eases by -1.5Pt to 3.1790 but the Bund tightens by +6Pts to 2.417%

The fact that the surge in volatility has not been confined to equities, as illustrated by the collapse of the euro on Friday, is prompting some observers to worry about the ongoing stock market correction.

We fear that the yield spread on French bonds, the decline in equities and, potentially, the fall in the euro will persist at least until July 7", warns Christopher Dembik, Investment Strategy Advisor at Pictet AM.

Our scenario is based more on an increase in volatility, with phases of fall followed by rebounds, rather than a continuous fall", he adds.

According to the analyst, everything will depend on the evolution of the polls.

Let's not forget that the political risk is not only French: the coalition in power in Germany is facing major differences over the budget, and a new government is due to be formed in Belgium", he points out.

The open question is how long this correction phase will last, and whether it marks the beginning of the end of the equity markets' rise.

Economic indicators, particularly those relating to inflation, which are likely to influence the trajectory of central banks' monetary policies, should therefore continue to have a major impact this week.
Meanwhile, we have just discovered that manufacturing activity fell slightly in June in the New York area, according to the local Fed's 'Empire State' survey.
New orders remained stable, while shipments rose slightly. Labor market conditions remained weak, with employment and hours worked continuing to contract.

The pace of input and selling price increases slowed slightly for the second consecutive month. Although current activity remains weak, optimism about the six-month outlook reached its highest level in over two years.
The only cause for satisfaction: the 'general conditions' index gained ten points, but remained below zero, at -6.0.

The dollar resumed its advance with +0.25% towards 1.0715/E, while the '$ Index' remained completely stable at 105.55.


In French company news, Casino announces the completion of its share consolidation, through the exchange of one hundred existing shares for one new share, and the completion of its capital reduction, through a reduction in the par value of its shares.

Thales announces that France's SIMu (Service Interarmées des Munitions) has signed an order for several tens of thousands of 120mm ammunition rounds, completing the order for 15,000 rounds signed in 2023.

Thales has also announced a contract with the Brazilian Air Force's DECEA, for the acquisition of Ground Master (GM 200 MM/A) all-in-one multi-mission radars, designed to enhance Brazil's air surveillance capabilities.

Finally, Airbus announces an order from Belgium for 15 H145M multi-role helicopters for the army, and for two of the same type, with three options, for the federal police.


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