The Paris Bourse (-3% to 7,475) posted a second consecutive sharp fall (4th out of 5), dropping -5% in 48 hours.
The index suffered its sharpest weekly correction since the end of February 2022, with a score close to -6%, against a backdrop of political uncertainty and questions over interest rates.
The Euro-Stoxx50 (-1.9%) shattered the 4,900 support level and lost 4.2% for the week, which also promises to be the worst in 27 months.
Wall Street reopened on a moderate downturn, with the S&P500 at -0.3% around 5,420pts.420Pts and a weekly gain of +1.6% (+14% since January 1), while the Nasdaq (unchanged) could well be 5/5 higher, with a weekly gain of +3.1%.

This represents a historic differential of almost 9% with the CAC40, a score unprecedented for a single week in the 21st century.
Hit hard by the results of the European elections and the announcement of the dissolution of the French National Assembly, the Paris market has been in the red since January 1 (-0.2%).

The markets fear that the uncertainty surrounding the outcome of the next legislative elections, with the RN possibly coming to power (or, as many strategists admit, the worst-case scenario would be the 'Popular Front' version of 2024), will lead investors to stay away from French equities for several months.

Already weakened by S&P's downgrading of France, the French 10-year government bond yield has risen by more than 25 basis points since Sunday, to 3.16%.

Over the past week, the spread with Germany has widened to almost 80 basis points (+77 points in 5 sessions), illustrating investors' mistrust.
Our OATs are down 1pt at 3.1700%, Bunds are down 14.5pts at 2.35%: a real wind of panic is blowing over our issues; the most 'comparable', Italian BTPs, are down 2.5pts at 3.92%, and show a +20pt premium to Bunds.

"We expect the election campaign to cause some stock market jitters, but nothing too serious and nothing lasting, in our opinion", moderates Christopher Dembik, investment strategy advisor at Pictet AM.

"The lesson we can learn from recent years is that we must never exaggerate the influence of political events on the medium-term performance of financial markets in developed countries (examples: Brexit, Trump etc.)", adds the analyst.

Recent history has taught us that volatility on European bond markets is often ephemeral", adds Guillaume Truttman, manager at Eiffel Investment Group.

The professional can't help but draw a parallel with the debt crisis that shook the eurozone in 2011-2013.

What may appear to be a gamble on the part of Emmanuel Macron is now fuelling a political uncertainty that has, in the past, left bad memories for European investors when the risk of eurozone fragmentation was acute", he recalls.

Added to this are fears about the trajectory of the Fed's monetary policy, which could result in fewer rate cuts than hoped for in the months ahead.

The only cause for satisfaction this week is that the latest statistics show that inflation is under better control in the United States, reinforcing the scenario of a "soft landing" for the US economy this summer.

Import price figures fell by 0.4% in May compared with the previous month (and are perfectly stable excluding petroleum products).

At the same time, export prices fell by 2.1% (and -2.1% excluding foodstuffs), according to the Labor Department.

Over 12 months, i.e. between May 2023 and May 2024, US import prices rose by 1.1% (+0.5% excluding petroleum products) and export prices rose by 0.6% (+1.5% excluding foodstuffs).
US T-Bonds took advantage of the situation to ease by -3.2Pts to 4.208%, i.e. -22Pts on a weekly basis.

In France, consumer prices were stable over one month in May 2024 and rose by 2.3% over one year (after 2.2% in April 2024), according to Insee. This slight rise in inflation is the result of a further acceleration in energy prices over one year (+5.7% after +3.8%) linked to a base effect on petroleum product prices (+2.9% after -0.7%) according to Insee.

Finally, the Euro sank by -0.6% to 1.0680 against the Dollar and lost 2% over the week.

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