The Paris stock market ended the session with a 1.03% gain at 7706 points, well helped by BNP Paribas (+3.2%), Sanofi (+3.1%) and Edenred (+2.5%), and despite the 16% drop in Eurofins Scientific, penalized by rumors of short-selling circulating on the Internet following a vitriolic report on the company's accounts by the Muddy Water Fund.

The Paris market will be put to the test this week by a series of important events, not only on the economic front, but also in the political arena.

Investors may indeed be risk-averse ahead of Sunday's first round of parliamentary elections, the outcome of which will prove decisive for the country's future.

For the time being, foreign investors are taking a wait-and-see attitude, but they are beginning to envisage two worst-case scenarios: a grand coalition in which LFI would have significant economic clout, or the absence of an absolute majority for the RN, which could lead to the resignation of the President of the Republic", stresses Christopher Dembik, investment strategy advisor at Pictet AM.

All this is obviously very hypothetical", the market analyst moderates, however.

"Let's not forget that France is planning to borrow massively on the markets in July. We're going to have to reassure quickly", he warns.

An Ipsos poll currently gives the Rassemblement National and its allies around 35.5% of voting intentions, followed by the Nouveau Front Populaire in second place with 29.5% of the vote.

"We believe that European share prices are incorporating an appropriate risk premium while awaiting the results of the French elections", judge the strategists at UBS.

The spread between the French 10-year bond and the German Bund of the same maturity, which has been closely watched over the past two weeks, will continue to be closely monitored until Sunday.

Investors could also be cautious just a few days ahead of the first debate between Joe Biden and Donald Trump, scheduled for Thursday, in the run-up to the US presidential election in November.

The markets are also likely to remain plagued by uncertainty regarding the pace of inflation across the Atlantic.

Against this backdrop, market participants will be keeping a close eye on Friday's release of the PCE inflation index, which the Fed is keeping a particularly close eye on.

Meanwhile, this morning investors took note of a sharper-than-expected deterioration in German business confidence in June, showing that Europe's leading economy is not yet out of the woods.

The Ifo business climate index, calculated on the basis of a sample of some 9,000 companies, fell to 88%.000 companies, fell to 88.6 from 89.3 in May.
This is a three-month low.
Bonds remain calm, with +2pts on the Bund at 2.4275% and the spread with the OAT (-1.5pts at 3.149%) contracting by -3.5pts to less than 72 basis points.

US T-Bonds remain unchanged at 4.265% (+1Pt symbolic), while British Gilts are down solo by +3.3Pts to 4.114%.

The Euro is up +0.35% against the Dollar, to $1.07304, while Brent crude is up nearly 1% in London, to $85.8 a barrel.

In other French company news, Safran announces that it has entered into exclusive discussions with a view to acquiring 100% of the capital of Preligens, a leader in artificial intelligence (AI) dedicated to the aerospace and defense industries, for an enterprise value estimated at 220 million euros.

Colas, the transport infrastructure business of the Bouygues group, announced on Monday that it had won seven road maintenance contracts in Finland, worth a total of 78.5 million euros.

Thales announces that it has been awarded the first Design Verification Report (DVR) in Europe by the European Aviation Safety Agency (EASA) for light UAV operations in SAIL III (moderate risk) conditions.

Finally, Alstom announces the inauguration of the Line 14 extensions to the north and south of Paris, which will enable one million passengers to travel from Saint-Denis Pleyel to Orly Airport in 40 minutes on board the MP14, the Group's new-generation rubber-tyred metro.

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