The Paris stock market ended the first session of the week down 1.35% at 7,893 points, heavily penalized by the banking sector, which plunged 7.5% for Société Générale, 4.8% for BNP Paribas and 3.6% for Crédit Agricole.

Yields are stretched by +11Pts in France and Italy, where the far-right has established itself as the leading political force in these 2 countries.

Across the Atlantic, Wall Street reopened without direction, with the S&P500 stable, the Dow Jones at -0.2% and the Nasdaq at 0.2%.

While the main topic of the week was supposed to be the Federal Reserve meeting, scheduled for Wednesday, the theme of politics was suddenly invited onto the markets this morning.

In particular, the victory of the Rassemblement National, with 31.4% of the vote, in the European elections has triggered a political and financial storm that extends far beyond France's borders.

In response, French President Emmanuel Macron has decided to dissolve the National Assembly, a first since 1997, and early elections will be held on June 30 and July 7.

This shock has opened up a period of questioning regarding the evolution of the French political panorama.

'In an extremely short campaign, everything suggests that the RN will be the leading party in the future Assembly', forecast Oddo BHF teams.

'Logically, the President should appoint the Prime Minister from this party and prepare for a "cohabitation", predicts the private bank.

According to IG France, this phase of political uncertainty offers investors a window of opportunity to take some of their gains on the index.

"In this phase of political stress, investors - and foreign investors in particular - may choose to 'desensitize' their exposure to the French index a little while they wait for a clearer picture", points out Alexandre Baradez, Head of Market Analysis at IG France.

The strategist points out that, until now, the CAC has been one of the most expensive European indices, with a price-earnings ratio (P/E) close to 16x, compared with 9.2x for the Italian FTSE MIB or 11.3 times for the Spanish IBEX

On the bond market, the French 10-year yield tightened by 12.5 basis points to 3.235% after the elections, and that of the German bond by 5.5 basis points to 2.662%.

T-Bonds are down +4pts to 4.47% 48 hours ahead of the FED's final statement, with rates expected to remain at 100%, and at 60% until Q4 2024.

The euro is deepening its losses (-0.5%) against the dollar, falling back to a 1-month low against the greenback at around $1.074.

Brent crude oil is back up +2% at $81 a barrel, and gold is back above $2,300 (+0.6%).300 (+0.6%).

In French company news, Airbus announces that Al Yah Satellite Communications Company PJSC (Yahsat), the satellite solutions provider of the United Arab Emirates, has signed a contract with Airbus Defence and Space for its new geostationary communications satellites, Al Yah 4 (AY4) and Al Yah 5 (AY5).

The European Commission has approved the acquisition of joint control of Mayakan Pipeline, based in the Netherlands, by Engie and Macquarie Group Limited.

SNCF Energie, a subsidiary of SNCF Voyageurs, announces that it has signed a 25-year direct renewable electricity purchase agreement (Corporate PPA) with Neoen, France's leading independent renewable energy producer.

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