Stock market: CAC 40 fragile rebound, political crisis in France still worrying

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The dissolution of the National Assembly had an impact on the European stock exchange (CAC 40, DAX, etc.). Investors are paying attention to the approaching early parliamentary elections. European stock markets rose slightly this Monday after last week’s decline, but the recovery is fragile.


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– Paris Stock Exchange.

THE Global stock exchanges are moving in mixed order on Monday, with Europe trying to bounce back from the previous week’s losses due to political instability in France, while Asian markets digest political and currency announcements. On the old continent, the Paris bourse gained 0.50%, Frankfurt 0.45% and London 0.31% around 07:45 GMT. “In Europe, France clearly stole the show last week after President Macron called early elections in response to his party’s poor performance in the European elections.”Deutsche Bank analysts summarize.

After the dissolution of the National Assembly in France announced by the French President on 9 June, there followed a week of upheaval and political turmoil in the country as alliances and candidate nominations were urgently decided. Two rounds of early parliamentary elections will be held on June 30 and July 7. “It is clear that this uncertainty will accompany us at least until the second round of the election and probably beyond.”Deutsche Bank analysts continued.

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The rate differential between France and Germany worries the CAC 40

In the bond market, the gap between French (3.17%) and German (2.39%) 10-year yields continues to be scrutinized after “exceeded 80 basis points” last week, “a record since the debt crisis that hit the eurozone more than a decade ago”, emphasized Ipek Ozkardeskaya, an analyst at Swissquote Bank. This difference between the two rates – or the “spread” – is a gauge to measure investor confidence in France and its long-term economic prospects. Analysts at Deutsche Bank estimate that the 10-year Franco-German spread could widen further to 90 or even 100 basis points.

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In the foreign exchange market, the euro was down 0.02% against the dollar at $1.0701 per euro. On Friday, the single currency fell to $1.0668, the lowest in a month and a half. In Asia, indexes started the week in mixed order. The Hong Kong stock exchange was flat (-0.00%) in recent trading, while Shanghai lost 0.55% and Shenzhen gained 0.31%. In Japan, the two main indices, Nikkei (-1.83%) and Topix (-1.70%) “hit two-week lows amid broad decline in stock markets as investors continue to evaluate Bank of Japan’s latest policy decision” (BoJ), John Plassard points out.

“On Friday, the BOJ kept interest rates unchanged as expected, but added that it would unveil a plan to reduce its bond-buying program at its next meeting in July.”, detailed by John Plassard. The main expected data for the week include retail sales in the United States on Tuesday, the consumer price index in the United Kingdom on Wednesday, inflation in Japan and indices of private sector activity in the euro area on Friday.

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CAC 40: principle, calculation and composition

Hyundai’s Indian subsidiary listed on the stock market

South Korean carmaker Hyundai (+3.92% in Seoul) has filed for an IPO for its subsidiary in India, which could be one of the largest operations of its kind in the country, according to several media outlets. The company plans to float 142.2 million shares, representing 17.5% of Hyundai Motor India, according to Bloomberg News, citing the company’s proposal.

Adidas, corruption case

German sports equipment maker Adidas (-1.31% in Frankfurt) is investigating a wide-ranging scandal of alleged corruption in China estimated by local employees of the group to be worth several “millions of euros”, the Financial Times (FT) reported on Sunday.

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Stable oil

Brent for August delivery was at $82.57 (-0.06%) in oil markets around 07:40 GMT. Its US equivalent, a barrel of West Texas Intermediate (WTI), for delivery in July, traded at $78.42 (-0.04%). Bitcoin lost 0.39% to $66,205.

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