New fall in the stock market, Cac 40 falls back to the 7,600 mark, the gap between France and Germany rates widens

Except for the University of Michigan’s U.S. consumer confidence index, a statistic that includes one-year inflation expectations, there will be no session breaks this Friday. The Cac 40 lost 1.35% to 7,604 points shortly after 10:00 a.m., bringing its decline for the week to nearly 5%, its worst weekly performance since September 2022. These are the banks that fell the most when Société Générale down 14.7% and BNP Paribas down 11.7% since Monday.

The defeat largely linked to astonishment at the prospect of an electoral showdown looming in the coming weeks following the dissolution of the National Assembly by head of state Emmanuel Macron. After winning the European elections, the National Assembly became the country’s leading political force. The latest opinion poll, by Opinionway, shows that the far-right party led by Jordan Bardella would win 32% of voting intentions in the parliamentary elections, ahead of the “Popular Front” on the left (25%) and the presidential majority (19%).

The credit of France in question

And a good score for the RN, with the possibility of settling in Matignon and the government, could trigger “ economic disaster » for France, estimates Frederik Ducrozet of Pictet Wealth Management. “Many of Marine Le Pen’s measures would be inflationary (…) and pose a great risk to businesses and to France’s credit rating.” A point highlighted by Moody’s, whose ‘Aa2’ rating puts it one notch above Fitch and S&P ratings. The gap between French and German 10-year yields continues to widen and is expected to reach its highest level since 2017 at more than 70 basis points. When you look at French debt metrics, the deficit is a problem, and I think combined with political uncertainty, it’s not surprising that spreads have widened. said Andrew Balls, chief investment officer at Pimco.

The BoJ is not changing its interest rate policy

Through the political mess, monetary policy brought back fond memories for investors of US central bank meetings and inflation data across the Atlantic. The producer price index recorded the biggest drop in seven months in May, confirming the easing of inflationary pressures. Several categories used to calculate the Fed’s preferred gauge — the personal consumption expenditure price index — were weaker in May than in April. “That opens the door a little bit more to a rate cut later this year,” said Comerica Bank’s Bill Adams, who expects easing in September and December.

The US central bank plans to intervene only once, but as its president Jerome Powell said, the possibility of two easings is not ruled out. Everything will depend on the development of economic data, the famous “data addiction” of central banks. Japan’s government this morning decided to keep its interest rates at current levels, but signaled that it wants to reduce bond purchases in the future.

In the Atos saga, the French state has made a non-binding confirmatory offer for a potential acquisition of its strategic activities with a global enterprise value of €700m, the troubled digital services group has announced. It strengthened by 15.3% on the stock market.

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