The Paris Bourse is set to open almost unchanged on Tuesday morning, with investors seemingly willing to put political issues to one side for the time being, in the hope that fundamentals will regain the upper hand.

At around 8:15 a.m., the future contract on the CAC 40 index - for delivery at the end of July - fell by two points to 7,634.5, signalling a balanced start to the session.

After gaining as much as 0.9% at yesterday's opening, the Paris market gradually gave up its gains as the day progressed, ending the day down 0.6% at 7,627 points.

The fall in luxury and KHOL (Kering, Hermès, L'Oréal and LVMH) stocks - amid fears of a tax hike in France following the NFP victory - sent the index plummeting, a move perhaps heralding further tremors.

Christopher Dembik, Investment Strategy Consultant at Pictet AM, warns: "It's clear that the specific political context in France will continue to weigh on stock market momentum.

"However, we must be wary of exaggerating the impact of politics on the CAC 40's performance.

For while the Paris Bourse has been in a tailspin recently, dropping 4.7% since the European elections on June 9, Wall Street continues to set record after record.

Buoyed by semiconductor-related stocks, the Nasdaq Composite last night hit its fifth all-time high, and its 25th record this year.

The S&P 500 is not to be outdone, reaching its 35th record since January 1 last night.

However, the coming days are likely to see a further bout of volatility, with the release of the latest US inflation figures on Thursday, which will be closely watched by investors.

At his scheduled hearing before the US Congress today, Federal Reserve Chairman Jerome Powell may acknowledge some progress in the fight against inflation, while reiterating that the Fed remains 'data dependent'.

This is usually seen as a signal that the rate-cutting cycle is about to begin", says Christopher Dembik of Pictet AM.

According to the Fedwatch barometer, traders are currently expecting a rate cut in September, with a probability of almost 74%.

Investors are also counting on a promising crop of second-quarter results to restore some of the optimism that has characterized stock markets since the start of the year.

The season kicks off in earnest on Friday, with the accounts of major US banks JP Morgan, Citi and Wells Fargo.

According to FactSet data, analysts anticipate an 8.8% year-on-year rise in US corporate earnings, which would be their best performance since early 2022.

A sign of market confidence, assets considered safe, such as German Bunds, hardly moved yesterday, allowing the spread with French OATs to contract to around 65 basis points.

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