(BFM Stock Exchange) – The Parisian index evolves sharply down this Tuesday, August 26, still weighted by the prospect of a censorship of the Bayrou government.

The CAC 40 continues to make (very) gray mine. The flagship index of the Paris Stock Exchange abandons 1.49% at mid-session, at 7,726.11 points, this Tuesday, August 26, even if it has erased part of its losses compared to the lowest of the day (-2.2%). The day before, the CAC 40 had already abandoned 1.59%.

Prime Minister François Bayrou announced on Monday that he would submit his government to a vote of trust on September 8, thus opening the way to a risk of censorship. Especially since the national rally, rebellious France, the Socialist Party and the environmentalists have announced that they will not give confidence to the government within the framework of this ballot in the National Assembly.

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“Political shock”

This episode revives the spectrum of a political blocking with the absence of measures necessary to clean up the trajectory of tricolor public finances.

On the bond market side, the gap between the yield of the French sovereign obligation at 10 years and that of the same maturity on the German obligation at 10 years (the famous “Spread”), the thermometer of market stress on the French signature, is part of 77 basic points, or 0.77 percentage points, an unprecedented level since April.

“The ‘political shock’ revives the French sovereign risk and regulatory and budgetary uncertainty. The most domestic and dependent sectors of public decisions logically won more,” explains Antoine Fraysse-Soulier, market analyst for Etoro.

“Usually, banking values ​​as well as companies related to services, communities and infrastructure are the first affected by this phenomenon. Very sensitive to budgetary, regulatory, tax decisions and interest rates, these sectors see their valuation decrease in the face of an uncertain future,” he adds.

Hard banks

The most heckled titles on the Paris Stock Exchange are actually banks, Société Générale losing 7.5%, Crédit Agricole its backing up 5.5%and BNP Paribas abandoning 5%. BTP and concessions groups, Eiffage (-6.9%) and Vinci (-5.2%) are also under pressure.

Apart from French political news, fears around the independence of the American Federal Reserve (Fed), can also weigh on the trend. During the night of Monday to Tuesday, US President Donald Trump announced the dismissal of the Fed governor, Lisa Cook, who disputes the legality of this decision.

This movement once again illustrates the will of the American executive to take control of an institution which needs to be independent to be credible with the markets. For Stephen Innes, of SPI AM, the independence of the Fed, which was already weakened, currently appears “in tatters” in the face of political pressures.

In the other markets, the euro fell 0.26% against the dollar to 1.1648 dollars. Oil drops. The October Brent of the Northern Sea contract abandons 1.6% to $ 67.12 a barrel while that of October on the WTI listed in New York fell 1.8% to 63.64 Dollars per barrel.