The Paris Bourse rose by nearly 0.3% this morning, reaching around 7720 points, driven notably by gains in Eurofins Scientific (+4%) and STMicro (+2.6%).

Following four weeks of significant volatility, the Paris market appears to have stabilized since the beginning of the week, although it remains cautious due to uncertainty surrounding the outcome of the upcoming second round of legislative elections scheduled for Sunday. As of this point in the week, the CAC 40 is showing a weekly gain of close to 3%.

“Assuming no major polling inaccuracies, the political situation in France is expected to have less of an impact on the CAC 40 in the coming sessions,” commented Christopher Dembik, Investment Strategy Advisor at Pictet Asset Management. He added, “This perspective is due to the fact that, on average, more than 60% of the revenues of major listed companies originate from international markets, which mitigates the direct influence of legislative elections on their business.”

In a recent strategy note, Morgan Stanley strategists suggested that now could be an opportune time to invest in French equities, anticipating a potential relief rally following Sunday’s election results.

Meanwhile, in the UK, the market reaction to Labour’s expected victory in the recent general election, ending 14 years of Conservative rule, has been relatively muted.

Investors are exercising caution ahead of the release of the US monthly employment figures later today, which are likely to impact the Federal Reserve’s future policy decisions. The US labor market has been gradually slowing down in recent months, potentially prompting the Fed to clarify its timeline for interest rate adjustments. Market consensus forecasts indicate an expected slowdown in non-farm payrolls to 190,000 in June, with the unemployment rate projected to remain unchanged at 4%.

Earlier today, data from Insee’s CVS-CJO showed a significant decline in French industrial production for May 2024, both in manufacturing (-2.7% after +0.5% in April) and overall industry (-2.1% after +0.6%).

Additionally, French trade data from the customs administration’s CVS-CJO indicated a worsening trade balance in May 2024, with the deficit widening to 7.99 billion euros from 7.56 billion euros the previous month.

In Germany, after a marginal increase in April (+0.1%), industrial production volumes declined by 2.5% in May compared to the previous month, according to seasonally and calendar adjusted data from Destatis.

On the European bond market, the yield on French ten-year OATs eased to 3.25% following successful Treasury auctions yesterday. Meanwhile, the German Bund yield approached 2.56%, maintaining a stable spread below 70 basis points, reflecting reduced risk premiums associated with French assets.

Lastly, Brent crude oil prices remained steady around $87.5 per barrel.

In corporate news from France:

BASF and Engie signed a seven-year agreement for the purchase of biomethane, with Engie supplying 2.7 to 3 terawatt-hours to BASF over the contract period.

Renault Group announced its participation in the New Energies Coalition for Transport and Logistics, aiming to collaborate on innovative and sustainable solutions in freight and AI utilization in supply chains.

Technip Energies and SBM Offshore formed a 50-50 joint venture named Ekwil, focused on the emerging market of floating offshore wind.