(News Bulletin 247) – The CAC 40 is progressing at mid-session, the hypothesis of an Assembly without an absolute majority having materialized. Questions remain about the continuation of political events and the Parisian market is in reality quite volatile.

The Paris Stock Exchange is hesitating a little the day after the second round of the legislative elections. After opening slightly down, the CAC 40 turned upwards and then moderated its gains. At mid-session, the Paris index gained 0.51% to 7,714.99 points.

To everyone’s surprise, the New Popular Front (NFP) came out on top in the election with around 180 deputies in the National Assembly. The left-wing coalition came out ahead of that of the presidential majority Ensemble (around 160 deputies) and the National Rally, whose number of deputies should be a little over 140 elected.

The scenario of an Assembly without an absolute majority, a scenario on which the market was counting, has therefore come to fruition. But uncertainties regarding the formation of a future government remain high.

“Although the initial impact (of the election result, editor’s note) was negative on French stocks, mainly due to the uncertainties over the budget and government spending that a left-wing “National Assembly” could bring, market confidence quickly reversed in early trading,” explains Pierre Veyret, technical analyst at Activtrades.

“Even though the left is considered the winner of the elections, it did not obtain an absolute majority. “This leads to an ‘Assembly’ without a majority, where the left will be limited in what it can do for the country, which could be the best scenario for investors,” he adds.

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TF1 and M6 in the market spotlight

“The small surprise of this second round” comes “from the number of seats obtained by the NFP and which automatically raises questions about the fiscal and budgetary discussions to come in the Assembly. With a public deficit higher than 5% of GDP last year and with the opening of the excessive deficit procedure against France (and other countries) by Brussels, the electoral result of the left bloc could raise some fears”, underlines Alexandre Baradez of IG France.

“But fears that will not necessarily be followed by effects to the extent that the presidential majority (and this is also the surprise of this second round) has not collapsed and comes in second position in number of seats,” he adds.

On the value side, some sectors are helped by the setback of the National Rally (RN). This is the case of the audiovisual groups TF1 (+4.9%) and M6 (+4.8%), because the RN wanted to privatize public audiovisual, which would have put the advertising market under pressure.

As with certain renewable energy groups such as McPhy (+4%) or Voltalia (+5.9%), the far-right party adopted a tone unfavourable to this type of energy during the campaign.

Outside of political news, Ubisoft (+8%) is supported by an upgrade of its recommendation to buy by Jefferies.

On other markets, the euro is stable against the dollar at $1.084. Oil is falling. The September contract on North Sea Brent is down 1% at $85.67 a barrel while the August contract on WTI listed in New York is down 1.2% at $82.20 a barrel.