The Paris stock exchange is outperforming other European markets, in a market subject to renewed volatility following Emmanuel Macron’s narrow lead over Marine Le Pen after the first round of the French presidential elections. Markets are also nervous in an environment that remains focused on inflation and the prospect of tightening monetary policies due to the tensions on commodity prices accentuated by the war in Ukraine.
Mid-session, the 40 gains 0.76% at 6,597.84 points after a low of 6,512.14 (-0.70%) and a peak at 6,605.81 (+ 0.88%), in a turnover of almost 980 million of Euro. In Frankfurt, the Dax loses 0.33% and in Milan on FTSE Eb plaice of 0.26%. The contracts future on US indices fell between 0.1% for Dow Jones and 0.8% for Nasdaq 100.
On the securities front, banks are surrounded thanks to the tightening of yield spreads between the French ten-year OAT and the German Bund of the same maturity in reaction to Emmanuel Macron’s slight advantage over Marine Le Pen. General Company won nearly 7% after the announcement of a deal to sell its stake in Russian bank Rosbank and its insurance branches. Among other financial stocks, Bnp Paribas appreciated by 3.6% e Axa 3%. The financial sector could benefit in the short term from a rebound of relief thanks to the initiatives of Emmanuel Macron to strengthen European integration,
Ditto for the motorway concessionaires I comein a Eiffageup 3.1% and 2.7%, respectively, after falling last week when Marine Le Pen proposed to renationalise motorways.
Conversely, the luxury sector, which has made great progress under Emmanuel Macron’s presidency, is suffering from releases since the publication of quarterly revenue figures of LVMH (-1.3%) e Hermes (-1.9%).
Bets are open for the second round
Many analysts see Emmanuel Macron’s narrow advantage over his rival as a sign that Marine Le Pen has never been closer to victory. A victory for the latter, considered anti-European and pro-Putin, could cause a shock wave comparable to that caused by the Brexit victory in 2016, according to some. As for Emmanuel Macron, the postponement of the votes from the left will be decisive given the good score of Jean-Luc Mélenchon, third in the first round.
The two candidates now have two weeks to decide between them and try to broaden their natural base. On the currency market, the euro stabilizes at $ 1.0955 while the first polls for the second round attribute 54% of the votes to Emmanuel Macron against 46% of Marine Le Pen. The market should not, however, be too confident in Emmanuel Macron’s slight advantage as regards the chances of Marine Le Pen’s victory ” it is far from zero “Says Xavier Chapard, strategist at Banque Postale Asset Management.
Inflation, again and again
The prudence is also reinforced by the anticipation of the Thursday meeting of the Board of Governors of the European Central Bank. Inflation remains a focus of concern and a more aggressive turn in monetary policy is widely expected, whether it be an early end of the asset purchase program or the temptation to raise interest rates, which could come in June.
Inflation will still be an issue in the US, with consumer price statistics for March released tomorrow. They could see an 8.4% increase in one year, according to the Bloomberg consensus, which would be its first move above the 8% bar since June 1982. The US 10-year yield has surpassed 2.75%. mark for the first time since March 2019 after peaking at 2.7822%.
Opening of the first quarter earnings season
The situation in Ukraine also continues to haunt the markets, and in particular the issue of sanctions on Russian hydrocarbons. EU foreign ministers will meet in Luxembourg on Monday, but there is little chance that an agreement will be reached on an embargo on Russian oil and gas.
The next few days will also mark the opening of the first quarter results season, particularly with those of major US banks JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo.