Michel Barnier’s probable decline has a limited impact on the CAC 40 index which closes the day up by 0.66%.
The government is on the grid but the CAC40 is not weakening. The Paris stock exchange closed in the green on Wednesday 4 December, a few hours before the vote on a motion of censure in the National Assembly which, in all likelihood, should bring down the Barnier government. The CAC 40 gained 0.66% to 7,303.28 points, an increase of 47.86 points. The day before it had gained 0.26%. The bond market closed stable. The interest rate on French ten-year loans reached 2.90%, the same level as the day before. Its German equivalent was at 2.06%.
“We should never exaggerate the influence of politics on stock markets. This can cause some turmoil, but that is rarely long-lasting.estimates Christopher Dembik,investment strategy consultant at Pictet AM. “Markets are putting things into perspective. France is not Greece, and it is not 2012. The ECB can act and European mechanisms exist to avoid a financial crisis. agrees Vincent juvyns, a member of JPMorgan’s AM strategy team. Prime Minister Michel Barnier was forced on Monday to take responsibility for the Social Security budget,a first 49.3 synonymous with a motion of censure and probably a fall, as the left and far right announced they will vote at unison wednesday evening in favor.
Contraction of activity
Paris was also supported, like other European stock markets, by data on private sector activity in the euro zone in November, which contracted for the second time in the last three months, according to the Flash PMI index published on Friday by S&P Global . “For the markets, this bad news is good news, because it increases the probability of rate cuts by the European Central Bank in the next meetings”explains Vincent Juvyns to AFP.
Even in the United States, data on job creation in November were lower than market expectations, “It portends monetary easing at the next Fed meeting” on December 17 and 18, according to Vincent Juvyns. Employment has become one of the most scrutinized metrics for determining the continuation of the Fed’s monetary policy. A dynamic job market is a sign of good economic health, which reduces the need to lower policy rates. Conversely, a slowdown gives central bankers more room to ease monetary policy, which is favorable for stocks. Particular attention will be given to the November US unemployment data, released on Friday, believed to be the most complete.