(News Bulletin 247) – The Paris index finally ended in the red, investors took note of the official American employment report, while keeping in mind the upcoming election weekend. The CAC 40 lost 0.26% on Friday evening, but posted weekly gains of 2.6%.

The official US employment report was undoubtedly the statistic not to be missed this Friday. It suggests that tensions in the US labor market are easing, confirming the latest employment statistics that were published on Wednesday.

The unemployment rate has exceeded 4% (at 4.1% in June), while the markets were expecting a stabilization of this rate. On the job creation side, they were higher than expected with 206,000 new jobs in June, when economists surveyed by the Wall Street Journal were counting on 200,000 job creations. But the figures for April and May were revised downwards.

Average hourly earnings, meanwhile, slowed to 3.9% year-on-year in June. This employment report could therefore give the Federal Reserve arguments to initiate a first rate cut in September. “This is the type of employment report the Federal Reserve has been waiting for: softer, but still decent, data that could justify two rate cuts this year,” Florian Ielpo, head of macroeconomic research at Lombard Odier Investment Managers.

CPRAM considers this employment report to be “mediocre and disappointing” since the unemployment rate is now above the forecast established by the Fed for the end of 2024.

“This report is starting to come close to the ‘unexpected weakening of the labor market’ that Jerome Powell had mentioned as a possible reason for accelerating the rate cut schedule,” judges Bastien Drut, head of strategy and economic studies at CPRAM.

Anemic volumes

The Paris Stock Exchange had initially reacted favorably to today’s publication, and was still up 0.5% before falling into the red from 3:45 p.m. The relief therefore gave way to some questions about the day’s statistics and to profit-taking below 7,700 points. The CAC 40 therefore closed down 0.26% at 7,675.62 points, after testing a low of 7,643.69 and losing 0.7%.

Friday’s session was again marked by anemic volumes – 2.5 billion euros traded – even with the support of Wall Street, which reopened its doors this Friday the day after a public holiday for Independence Day.

The political context remained in the background two days before the second round of the legislative elections in France. However, the tension has eased this week, with the latest polls showing that the National Rally would obtain a number of seats clearly insufficient to have an absolute majority. This is the scenario favored by the market.

Over the week as a whole, however, the Paris index posted a gain of 2.62%. The CAC 40 is still trading around 4% below its price prior to Emmanuel Macron’s announcement of the dissolution of the National Assembly.

On the bond market, the gap between the yield on France’s 10-year debt and that of Germany, a gauge of market stress, has narrowed considerably. This gap stands at 66 basis points (0.66 percentage points), whereas it had exceeded 80 basis points before the first round.

“As we approach the elections, it is clear that the markets have eliminated part of the risk premium that had been integrated into French assets,” summarizes Deutsche Bank.

Eurofins counterattacks again

On the stock market, Eurofins gained 4.4% after publishing a statement to deny a second wave of accusations from short seller Muddy Waters.

STMicroelectronics gained 2.2%, driven like Soitec (+5.1%) by the prospects of the Korean Samsung.

Rémy Cointreau fell 1.9% as China holds a hearing on July 18 on its anti-dumping investigation into European brandies.

On the small and mid-cap side, LDC fell 1.7% after activity figures for its first quarter of 2024-2025 were in line with expectations.

On other markets, the euro gained 0.15% against the dollar to $1.0826. Oil rose slightly, supported by demand in the United States with the “driving season”. The September contract on North Sea Brent gained 0.3% to $87.71 per barrel, while the August contract on WTI listed in New York appreciated by $84.27 per barrel.