The Paris stock market is giving itself some breathing space: after an incursion below 7,500 (-1.2% towards 7,480), the CAC40 recovered to -0.3/-0.4% towards 7,535Pts.

Between 9.45 and 2pm, the CAC40 returned to square one: with Monday's gains wiped out (the CAC40 will post up to +2.8% on Monday morning, the day after the 1st round of legislative elections), it would appear that this bullish interlude was essentially linked to technical factors, such as short-buybacks, as the "worst" feared by investors did not occur.

Sentiment appears a little less negative at the end of the afternoon, with Wall Street helping to erase the initial 0.3% losses on the S&P and Nasdaq... but in France, uncertainty remains almost total concerning the political sequence that will open on the evening of July 7.

Economic visibility remains zero (what reforms are to come, what room for manoeuvre will the future government have?), and the latest meeting of ministers at the Elysée - according to rumours - suggests that 'chaos' is not sparing the highest echelons of power, which is bound to add to the discomfort of the markets, which cannot cling to any mobilizing scenario (either to go back to buying, or to hurry to selling).

Investors are beginning to integrate the scenario of a paralysis of the political environment in France... which will not be tenable for long if French debt is downgraded this autumn.

'It is highly likely that the technical rebound seen yesterday will run out of steam, as there are no motors to sustain it', warned Christopher Dembik, investment strategy advisor at Pictet AM, this morning.

We think that the political risk in France will definitely take a back seat on the stock market - unless there is a surprise in the polls", he adds.
One of the positive points of this session is that the Euro-Stoxx50 (-0.5%), which was losing -1.2% at around 4,870, will preserve its support at 4,900pts.

This morning, investors took note of the annual inflation rate for the euro zone. It is estimated at 2.5% in June 2024, compared with 2.6% in May, according to a flash estimate published by Eurostat, the European Union's statistical office.

German inflation, published a little earlier, came in a little above consensus, while moving closer to the ECB's 2% target, giving traders hope of pleasant surprises.

On the bond front, the 10-year Bund hardly reacted at all (-1.5 basis points) and continued to trade at around 2.5900%, while the French OAT fared better, falling 4 basis points to 3.3090%, i.e. a spread of around 72 points (10 points less than 3 sessions ago).

The US T-Bond is easing by 5pts to 4.4400%, but this has no impact on the E/$ parity, which seems to be stuck at 1.0735.

Brent crude oil is up by a further +0.7% to $87.4 a barrel (closing the bearish gap of April 30).

Professionals will also be counting on a promising crop of second-quarter results, starting next week, to bring market fundamentals back to the fore and restore the upward trend that has characterized stock markets since the beginning of the year.

In French company news, Sodexo reports sales for its third accounting quarter of 6.07 billion euros, up 5.6% year-on-year, including a negative currency effect of -0.2% and a contribution from acquisitions net of disposals of -1%.

Thales announces the inauguration of an assembly line to quintuple production of 70mm laser-guided rockets at its Herstal site in Belgium, in order to help strengthen the ammunition capabilities of Europe's armed forces.

Vinci announces that Nuvia, a Vinci Construction subsidiary specializing in nuclear projects and services, has finalized the acquisition of MBO Groupe, a major player in insulation, scaffolding and structural containment in France.

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