French stock market gains on bet Le Pen won't win majority (2024)

Table of Contents
Live Reporting Signing off... Tech giants boost Nasdaq in choppy trade Markets will ‘breathe a sigh of relief’ from French election results British couple land £2bn payday after cashing in data empire London stocks steady as housebuilders offer support European stocks climb tracking French election Saudi Arabia announces discovery of seven oil and gas deposits FTSE 100 flat France’s flag carrier braces for €180m hit as tourists shun Paris Olympics French regulator planning to take action against Nvidia The world’s largest farm machinery manufacturer to make nearly 600 redundancies Samsung workers declare immediate strike Banks give US markets a boost, but chip stocks pull them down US stocks drifting, but French shares jump Net zero ‘to fuel a decade of global inflation’ Production at US factories shrinks for a third month American considers carbon tax on Chinese imports US manufacturing grows for second straight month Oil prices rise as China’s manufacturing sector grows Wall Street rises ahead of jobs market data Germany’s central bank urges Scholz to cut taxes Poland poised to subsidise mortgage market, says minister Tesla rival BYD ‘sells record number of electric cars’ Euro rises as markets ‘breathe a sigh of relief’ ECB to only cut rates ‘gradually’ as German inflation falls German inflation slows more than expected Chewy shares jump as memestock trader reveals stake Wall Street rises ahead of jobs figures Unite calls off steel strike action Boeing given a week to admit fraud charges amid battle to contain safety crisis Titanic shipbuilder suspends shares amid row with auditors Facebook owner accused of breaking EU’s competition rules Mortgage borrowing halves as interest rates bite French market rally falters as far-Right dominates election Travellers avoiding Paris ahead of Olympics, warns Air France Manufacturers ‘hoping to build on’ expected interest rate cuts Manufacturing grows despite highest cost inflation in 17 months China stocks rise as manufacturing picks up Boots boss to step down after six years Stocks in ‘relief rally’ as chances of Frexit diminish, say economists Property stocks help push FTSE 100 higher French stocks lead Europe as far-right expected to be denied majority National Rally victory ‘less convincing’ than polls suggested French stocks surge as Le Pen expected to miss majority UK markets jump after first round of French election French debt pain eases as Le Pen could miss out on majority Boeing agrees $8.3bn takeover of supplier blamed for Max aircraft crisis House prices rise despite high interest rates Euro hits highest level since Marcon called French elections Good morning 5 things to start your day What happened overnight References

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French stock market gains on bet Le Pen won't win majority (1)

European stock markets rose today amid signs France’s hard-Right would not win enough seats for an overall majority in legislative elections.

In the bond market, the premium that investors demand to hold French government debt fell from a 12-year high.

Investors hoped that there was now less chance that either the hard-Left or the hard-Right would have a free hand to roll out big-spending policies that could hurt France’s fiscal position, analysts said.

Marine Le Pen’s far-right National Rally (RN) party scored historic gains to win the first round of France’s parliamentary elections, but the final outcome will depend on days of alliance-building before next week’s run-off vote.

Fiona Cincotta, an analyst at City Index owner StoneX, said: “The market is experiencing a relief rally that NR looks unlikely to achieve an absolute majority.”

This result had been considered the worst-case scenario, given fears of high fiscal spending and mounting debt levels, which had pulled stocks and, particularly, banks lower heading into the first round of the election.

A hung parliament could lead to months of political paralysis and chaos, analysts say.

It could meanwhile “reduce the chance of a big spending splurge, but wouldn’t exactly help sort France’s fiscal position, which is already quite fragile”, said Neil Wilson, chief market analyst at Finalto.

At close, the Paris Cac 40 index was up 1.1pc. The German Dax was up 0.3pc, while the pan-European Stoxx 600 was up by a similar amount. The FTSE 100 was flat.

The gap between French and German 10-year sovereign bond yields - a gauge for the risk premium investors demand to hold French bonds – tightened by 0.06 percentage points to 0.74 percentage points.

Read the latest updates below.

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Signing off...

That’s all for today from the Markets blog. Chris Price will be back in the morning to cover the latest in the markets. See you tomorrow.

Tech giants boost Nasdaq in choppy trade

The biggest technology stocks lifted the tech-heavy Nasdaq in volatile trading on Monday, while the S&P 500 and the Dow were nearly flat, with focus moving to labor market data due later in the week for cues on the timing of interest rate cuts this year.

Apple, Microsoft and Amazon rose between 1.2pc and 2.1pc, and were the biggest boosts to the Nasdaq.

Semiconductor stocks such as Advanced Micro Devices, Arm Holdings and Micron Technology fell between 1pc and 4pc.

With the equity market shut on Thursday for America’s Independence Day, trading is expected to be volatile in thin volumes during the week.

Markets will ‘breathe a sigh of relief’ from French election results

French shares rallied today, as parliamentary elections in the UK and France are set to dominate the agenda for European investors this week.

Alex Everett, an investment manager for Abrdn, said markets will likely “breathe a sigh of relief” after exit polls showed the hard-right National Rally party took the lead but may fall short of an absolute majority. He said:

With the tail risk of a Left majority seemingly avoided, this allays the market’s worst fears of untrammelled spending.

Mr Everett said the country’s leftist alliance party and centrist group will likely try to strike deals to “derail” the possibility of the National Rally taking an outright majority.

Chris Beauchamp, chief market analyst at IG, said European markets were enjoying a “relief rally” but there is “plenty of nervousness about the outlook for France and the French economy.”

British couple land £2bn payday after cashing in data empire

A husband and wife duo who built an outdoor theatre on the grounds of their Suffolk farm estate have been catapulted into Britain’s rich list after netting £2bn from the sale of their financial data business. Michael Bow reports...

Mark and Lindy O’Hare, who own a Grade-II listed farmhouse and 350-seat theatre, have struck a deal to sell their data group Preqin to fund giant BlackRock for £2.5bn.

Mr and Mrs O’Hare own 80pc of the business through their family holding company Valhalla Ventures, triggering a major payday once the deal completes.

The deal makes the couple richer than BlackRock boss Larry Fink, who founded the business 36 years ago and is worth £1.3bn.

Preqin sells financial data on alternative assets such as infrastructure, private equity and hedge funds to investment banks and City customers.

It was set up in London in 2002. Cambridge-educated Mr O’Hare ran the group as chief executive before stepping down in 2022. Mrs O’Hare worked at the firm until 2008.

Read the full story...

London stocks steady as housebuilders offer support

The FTSE 100 began the week on a steady note on Monday, supported by housebuilders and precious metal miners, while investors remained cautious ahead of Britain’s July 4 election. The index closed down flat.

Opinion polls suggest Labour Party leader Keir Starmer is set to replace Conservative Rishi Sunak as prime minister following Thursday’s parliamentary elections.

Danni Hewson, head of financial analysis at AJ Bell, said:

Markets like stability. The polls suggest that we are not in for any surprise, but it’s the kind of change which has been poked, prodded and priced in.

Housebuilders led sectoral gains, up 1pc after a Nationwide report showed British house prices made a small gain in June from May, but the impact of higher interest rates still weighed on the property market.

Precious metal miners and oil stocks edged up over 1pc each, tracking higher gold and oil prices.

European stocks climb tracking French election

European markets rose today amid signs France’s hard-Right would not win enough seats for an overall majority in legislative elections.

Fiona Cincotta, an analyst at StoneX, said:

The market is experiencing a relief rally that NR looks unlikely to achieve an absolute majority.

This result had been considered the worst-case scenario, given fears of high fiscal spending and mounting debt levels, which had pulled stocks and, particularly, banks lower heading into the first round of the election.

A hung parliament could lead to months of political paralysis and chaos, analysts say.

It could meanwhile “reduce the chance of a big spending splurge, but wouldn’t exactly help sort France’s fiscal position, which is already quite fragile”, said Neil Wilson, chief market analyst at Finalto.

At close, the Paris Cac 40 index was up 1.1pc.

Frankfurt also advanced, adding around 0.3pc after Germany’s official inflation rate slowed more than expected in June, in welcome news for the European Central Bank following last month’s first interest rate cut since 2019.

Saudi Arabia announces discovery of seven oil and gas deposits

Saudi Arabia’s energy minister has announced the discovery of seven oil and gas deposits in the kingdom’s Eastern Province and Empty Quarter, the official Saudi news agency SPA reported.

Prince Abdulaziz bin Salman said state oil group Saudi Aramco had discovered “two unconventional oil fields, a reservoir of light Arabian oil, two natural gas fields, and two natural gas reservoirs”.

Two unconventional oil fields and one reservoir were discovered in Saudi’s Eastern Province while two natural gas fields and two reservoirs in the Kingdom’s Empty Quarter.

French stock market gains on bet Le Pen won't win majority (2)

FTSE 100 flat

The FTSE 100 was virtually unchanged compared with the start of trading, closing up just 0.03pc. The top riser was miner Glencore, up 2.4pc, followed by Standard Chartered, up 2.3pc. The biggest faller was BAE Systems, down 3.6pc, followed by insurer Beazley, down 3pc.

Meanwhile, the FTSE 250 fell 0.3pc. The top riser was XPS Pensions Group, up 5.7pc, followed by Trustpilot, up 4.2pc. The biggest faller was cruise ship operator Carnival, down 5.8pc, followed by automotive supplier Dowlais, down 5.3pc.

France’s flag carrier braces for €180m hit as tourists shun Paris Olympics

France’s flag carrier is bracing for a €180m (£153m) hit as tourists shun Paris during the summer Olympics. Christopher Jasper reports:

Despite the supposed allure of the first Paris Games in a century, people are avoiding the City of Light in their droves, leaving airliner seats empty and depressing revenue, Air France revealed on Monday.

“International markets show a significant avoidance of Paris,” it said, with “traffic to and from the French capital lagging behind other major European cities”.

“Travel is expected to normalise after the Olympic Games, with encouraging demand levels projected for the end of August.”

The carrier, which is the official airline for the event, said the trend is expected to wipe up to €180m from group sales during the June-August period.

Read the full story...

French regulator planning to take action against Nvidia

Nvidia is set to be charged by the French antitrust regulator for practices that are allegedly anti-competitive, people with direct knowledge of the matter told Reuters, making it the first enforcer to act against the company.

The French so-called statement of objections or charge sheet would follow dawn raids in the graphics cards sector in September last year, which sources said targeted Nvidia. The raids were the result of a broader inquiry into cloud computing.

The world’s largest maker of chips used both for artificial intelligence and for computer graphics has seen demand for its chips jump following the release of the generative AI application ChatGPT late last year, triggering regulatory scrutiny on both sides of the Atlantic.

Nvidia declined to comment to The Telegraph.

The world’s largest farm machinery manufacturer to make nearly 600 redundancies

John Deere is making nearly 600 workers redundant as the farm equipment giant deals with declining demand.

Deere confirmed Monday that the production positions being cut are concentrated at two factories in Iowa and one at its home base in Moline, Illinois.

In its second-quarter earnings release in May, Deere reported a more than 15pc decline in revenue, the third straight quarter of year-over-year sales declines. Executives said at the time that they expected further sales declines in the second half of the fiscal year and said it would continue to “take proactive steps to reduce production and inventory.”

John Deere turned in a quarterly profit of $2.37bn, down from $2.86bn in the same period the previous year, and lowered its full-year 2024 profit forecast for a second time as farmers continued to buy fewer tractors and other equipment due to declining prices for their crops.

Deere shares slipped 2pc this afternoon and are down about 8.2pc since the beginning of 2024.

French stock market gains on bet Le Pen won't win majority (3)

Samsung workers declare immediate strike

Workers at Samsung Electronics in South Korean will go on an immediate strike, a union chief announced today, as a dispute over pay and benefits at the tech giant escalates.

“Until our demands are met, we will fight with the ‘no pay, no work’ general strike,” said Son Woo-mok, head of the National Samsung Electronics Union.

The move follows a one-day walkout in June, the first such collective action at the company which went decades without unionisation.

Mr Son said Samsung Electronics’ latest offer to employees “has angered all members” of the union, which represents around 28,000 workers.

Management at the firm, the world’s biggest producer of memory chips, has been locked in negotiations with the union since January.

The company has offered workers a pay hike of 5.1pc this year ahead of the June strike.

Samsung Electronics is one of the world’s largest smartphone makers and also one of the only companies globally to produce high-end memory chips used for generative AI, including top-of-the-line artificial intelligence hardware from industry leaders such as Nvidia.

Company founder Lee Byung-chul, who died in 1987, was adamantly opposed to unions, saying he would never allow them “until I have dirt over my eyes”.

The first labour union at Samsung Electronics was formed in the late 2010s.

Samsung has been approached for comment.

French stock market gains on bet Le Pen won't win majority (4)

Banks give US markets a boost, but chip stocks pull them down

Banking stocks lifted the Dow Jones Industrial Average of 30 leading US companies, while semiconductor shares weighed down on the Nasdaq this afternoon as focus moves to labor market data due later in the week for cues on the Federal Reserve’s monetary policy path.

The S&P 500 banking index jumped as much as 1.3pc to its highest in more than a month, with shares of JP Morgan Chase touching an all-time high. Benchmark US Treasury yields jumped to their highest in over two weeks.

AI chip firm Nvidia fell 1.1pc and other semiconductor stocks such as Micron Technology and Advanced Micro Devices dipped 0.7pc and 4.5pc, respectively. The Philadelphia SE Semiconductor index is down 1.2pc.

US stocks drifting, but French shares jump

US stocks are drifting this afternoon after the French market roared higher as elections continue to drive swings in financial markets worldwide.

The S&P 500 is currently virtually unchanged as it kicks off a short, four-day week that includes the Fourth of July holiday. The Dow Jones Industrial Average is down 0.1pc, and the Nasdaq Composite is up 0.1pc.

Some of the world’s strongest action is in Europe, where the Cac 40 index in Paris jumped as much as 2.8pc before settling to a gain of 1.4pc.

Results from France suggested that a hard-Right political party may not win a decisive majority in the country’s legislative elections. That could mean France may avoid one of the worst-case scenarios for financial markets, where such a victory could lead to policies that would greatly increase the French government’s debt and other challenges.

Net zero ‘to fuel a decade of global inflation’

The world’s transition to net zero will add 1.6 percentage points to inflation annually for the next decade, a large investment firm has warned. Eir Nolsøe reports:

French asset manager Carmignac has said that central banks will struggle to keep inflation under control because of the high levels of spending needed for green energy projects.

Pressure on consumer prices will be driven by a wave of investment amounting to 2pc of global GDP, rising oil costs, and fossil fuel industries becoming obsolete.

This will put governments at odds with central bankers obliged to raise interest rates to fight inflation amid a scramble to raise trillions of dollars of capital.

Raphaël Gallardo, Carmignac’s chief economist,said that central banks and policymakers would be faced with a dilemma of prioritising low inflation or a faster transition.

Read the full story...

Production at US factories shrinks for a third month

American factory activity shrank again in June, for the third month on a trot, according to data from Institute for Supply Management (ISM). It was also the 19th contraction in the last 20 months.

Timothy Fiore of the ISM said:

Demand remains subdued, as companies demonstrate an unwillingness to invest in capital and inventory due to current monetary policy and other conditions.

Production execution was down compared to the previous month, likely causing revenue declines, putting pressure on profitability.

Suppliers continue to have capacity, with lead times improving and shortages not as severe.

American considers carbon tax on Chinese imports

The US is mulling a possible carbon pricing system on imports, its top climate diplomat said, in a move that could mark a radical shift shift in how global free trade operates.

John Podesta told the FT:

We’re not going to just give up our industrial base to people who are dumping carbon and freeriding on a system that doesn’t account for, and in fact, kind of subsidises the dumping of high carbon production cost into open markets ...

The global trading system doesn’t properly take into account the embodied carbon in tradable goods. So we’re undertaking a review of that, trying to deepen the data that we are going to need to implement a policy framework for that.”

Since the protection of intellectual property rights was agreed between World Trade Organisation (WTO) member countries in rules that began in 1995, some environmentalists have argued that the WTO needs also to enshire environmental protection.

US manufacturing grows for second straight month

The US manufacturing sector grew for the second month in a row in June, according to a closely-watched survey.

The S&P Global US manufacturing PMI expanded to a three-month high of 51.6 in June from 51.3 in May.

Chris Williamson, chief business economist at S&P Global, said:

The S&P Global PMI survey shows US manufacturers struggling to achieve strong production growth in June, hamstrung by weak demand from domestic and export markets alike.

Although the PMI has now been in positive territory in five of the first six months of 2024, up from just one positive month in 2023, growth momentum remains frustratingly weak.

Factories have been hit over the past two years by demand switching post-pandemic from goods to services, while at the same time household and business spending power has been diminished by higher prices and concerns over higher-for-longer interest rates.

These headwinds persisted into June, accompanied by heightened uncertainty about the economic outlook as the presidential election draws closer.

Business confidence has consequently fallen to the lowest for 19 months, suggesting the manufacturing sector is bracing itself for further tough times in the coming months.

I’m heading off now. Alex Singleton will send live updates from here.

Oil prices rise as China’s manufacturing sector grows

Oil prices edged higher after data from China showing its manufacturing sector is growing, potentially boosting demand.

Brent was up 0.8pc at more than $85 a barrel after rising almost 6pc last month. US-produced West Texas Intermediate was up 0.8pc to more than $82.

The latest PMI figures showed China’s manufacturing activity expanded in June at its fastest pace in three years.

Elsewhere, Israel Prime Minister Benjamin Netanyahu said he is committed to fighting Hamas until it is eliminated, increasing the risks to supply.

Wall Street rises ahead of jobs market data

The main US stock indexes opened higher ahead of employment market figures this week which could firm up bets around interest rate cuts by the Federal Reserve.

The Dow Jones Industrial Average rose 67.34 points, or 0.2pc, at the open to 39,186.20.

The S&P 500 opened higher by 10.60 points, or 0.2pc, at 5,471.08, while the Nasdaq Composite gained 41.29 points, or 0.2pc, to 17,773.90 at the opening bell.

Germany’s central bank urges Scholz to cut taxes

Germany’s government should cut taxes and reduce red tape to attract investment into Europe’s largest economy, the head of its central bank has said.

Bundesbank president Joachim Nagel said the administration led by chancellor Olaf Scholz should also boost the workforce and increase the carbon levy to lure investors who think the country “lags far behind in terms of growth” compared to similar countries.

Addressing a conference in Frankfurt on Monday,Mr Nagel said Germany was “still facing major challenges” that would require significant investment but added there were “some economic bright spots”for its economy.

He warned there was “widespread concern that investors were increasingly avoiding Germany”. The Financial Times reported he said:

I am convinced that if Germany is to move on to a higher growth path, there is no way around more investment.

Politics can remove hurdles in many areas, but not all of them.

French stock market gains on bet Le Pen won't win majority (5)

Poland poised to subsidise mortgage market, says minister

Poland is reviving plans to help borrowers struggling to repay their mortgages as homeowner grapple with the most expensive repayments in the EU.

Its government could subsidies up to 175,000 mortgages over the next five years, development minister Krzysztof Paszyk told financial website Money.pl.

He said high costs are the main problem holding back the number of house purchases.

Polish house prices grew at the fastest pace in the EU last year, rising by 13pc as they were boosted by loan support offered by the country’s previous government.

But the present coalition administration, which is six months old, has flip-flopped on providing more aid amid concerns that it could over stimulate the housing market.

Poland is home to the EU’s most expensive new mortgages, costing 7.72pc per year as of April, twice the level seen in the eurozone, according to European Central Bank data.

French stock market gains on bet Le Pen won't win majority (6)

Tesla rival BYD ‘sells record number of electric cars’

Tesla rival BYD sold a record number of electric and hybrid cars, new figures suggest, putting it on the verge of regaining the crown as the world’s biggest EV seller.

China’s best-selling car brand sold nearly 1 million models during the second quarter, according to sales data compiled by Bloomberg News.

The Shenzhen-based car maker is thought to have made quarterly sales of 426,000 purely electric vehicles, putting it within striking distance of overtaking Tesla as the biggest seller of EVs globally again.

Tesla is projected by analysts to sell 441,019 EVs in the second quarter and is experiencing a slump in sales in key markets like China and Europe.

Shares in BYD’s Hong Kong-listed stock went up 15pc in the most recent quarter, out-pacing Tesla’s 13pc gain and most industry peers, which fell over the same period.

French stock market gains on bet Le Pen won't win majority (7)

Euro rises as markets ‘breathe a sigh of relief’

The pound has slipped against the euro as the single currency rallied amid predictions that France’s far-Right party might not secure an outright parliamentary majority after the first round of elections.

The euro was up 0.1pc at 84.8p, climbing away from a two-year low of 83.97p hit in mid-June. The single currency climbed around 0.3pc against the dollar.

Bas van Geffen, senior macro strategist at Rabobank, said markets “mostly breathe a small sigh of relief as Rassemblement National did not get as much support as some polls had suggested”.

Sterling was up 0.2pc against the US dollar at $1.267 as the euro’s gains held down the greenback.

The pound has traded around the same level since the start of the year, and is one of the best performers against the dollar in 2024.

Analysts have said Labour’s expected election win on Thursday has likely helped British assets.

Matthew Ryan, head of market strategy at Ebury, said: “A very large Labour majority could be a modest positive, as markets see a smaller political risk premium attached to the pound, on hopes of closer ties to the European Union.”

ECB to only cut rates ‘gradually’ as German inflation falls

The European Central Bank will remain “cautious” despite the drop in German inflation from 2.4pc to 2.2pc, according to economists.

Franziska Palmas, senior Europe economist at Capital Economics, said:

The limited breakdown available for the CPI measure shows that food inflation rose whereas energy inflation fell.

Meanwhile, core CPI inflation edged down from 3pc to 2.9pc, with CPI services inflation unchanged at 3.9pc.

The German data, together with figures for France, Italy, Spain and Portugal released last week, suggest that eurozone headline HICP inflation fell a bit more than expected in June, from 2.6pc to 2.4pc.

However, the eurozone core rate is likely to have only edged down from 2.9pc to 2.8pc. We have less information about the breakdown of core inflation, but the available national data suggest services inflation is likely to have remained stuck around 4pc, where it has been since November.

Overall, slow disinflation in the core and services categories is consistent with our view that the ECB will cut rates only gradually.

We continue to forecast a pause in July and two more cuts this year, taking the deposit rate to 3.25pc.

German inflation slows more than expected

German inflation slowed by more than expected last month, official figures showed, in a sign that Europe’s largest economy is getting to grips with rampant price rises.

The consumer prices index (CPI) fell to 2.2pc in June, the federal statistics agency Destatis said, down from 2.4pc in May.

It was less than the 2.3pc expected by markets, while core inflation, which strips out volatile food and energy prices, fell to 2.9pc.

It was the first time underlying inflation in Germany has been below 3pc in more than two years.

Germany's #inflation rate slows more than expected to 2.2% YoY in June from 2.4% in May vs 2.3% estimated, while core CPI drops <3% for 1st time since Feb2022. pic.twitter.com/2Ux7DrEBUo

— Holger Zschaepitz (@Schuldensuehner) July 1, 2024

Chewy shares jump as memestock trader reveals stake

Pet food retailer Chewy jumped in premarket trading in New York after a controversial memestock trader revealed he has a stake in the company.

Chewy rose by as much as 29pc ahead of the opening bell after Keith Gill, who goes by the name Roaring Kitty on Twitter, revealed he owns nine million Class A shares worth about $245m (£193m) based on Friday’s closing price.

Mr Gill shot to fame in 2021 after he inspired the memestock craze which saw investors back video game retailer GameStop, which had been the target of attacks from short sellers.

His story was told in the 2023 film Dumb Money.

French stock market gains on bet Le Pen won't win majority (8)

Wall Street rises ahead of jobs figures

US stock indexes edged higher ahead of jobs market numbers later in the week that could signal the next steps for the Federal Reserve’s monetary policy.

AI chip giant Nvidia shed 2.8pc before the opening bell, while other megacaps such as Alphabet, Microsoft and Amazon were slightly up.

Focus will be on ISM and S&P Global manufacturing PMIs later in the day.

This follows Friday’s personal consumption expenditures (PCE) price index, an inflation report monitored by the Fed, which was unchanged in May and underscored the narrative of slowing inflation and resilient economic growth.

Also scheduled for the week are JOLTS job openings data on Tuesday, and ADP employment, factory orders, ISM services PMI data and minutes of the Fed’s latest policy meeting on Wednesday.

Non-farm payrolls data is due on Thursday, when trading will be shut for equities on account of US Independence Day.

Traders have largely stuck to their bets of around two interest rate cuts this year, starting from September, according to LSEG FedWatch.

In premarket trading, the Dow Jones Industrial Average, S&P 500 and Nasdaq 100 were all up about 0.2pc.

Unite calls off steel strike action

Unite has suspended an overtime ban and a planned all out strike at steel giant Tata over job losses, the union announced.

Members have been taking industrial action such as banning overtime and were due to stage an all-out strike from next Monday.

The union is embroiled in a dispute with the company over plans to close the two blast furnaces at its plant in Port Talbot, south Wales and switch to a greener way of steel production, which needs fewer workers.

The decision to call off the strike action follows a threat by Tata to bring forward the closure of its blast furnaces amid concerns it would not be able to operate them safely during the industrial action.

Community and the GMB unions are also calling for Tata to change its plans but have not called for industrial action.

Alun Davies, national officer for Community said: “With thousands of jobs at stake, we welcome Unite’s decision to withdraw their strike action and get back around the table with their sister steel unions.”

French stock market gains on bet Le Pen won't win majority (9)

Boeing given a week to admit fraud charges amid battle to contain safety crisis

Boeing has been given a week to admit fraud charges or face a public trial over two fatal crashes involving its 737 Max planes.

Matt Oliver and Christopher Jasper have the details:

In a fresh blow to the crisis-hit aerospace giant, the US Department of Justice is said to have given the company until Friday to admit wrongdoing.

The company would have to pay a $244m (£192m) criminal fine and accept a three-year probation period, CBS and Bloomberg reported.

But pleading guilty to a criminal charge could also have implications for the company’s work with the US military, it is feared.

Read how the fresh plea bargain being offered to Boeing has angered families of people who died in the 737 Max crashes.

Titanic shipbuilder suspends shares amid row with auditors

Struggling shipbuilder Harland & Wolff has suspended trading in its shares on the London Stock Exchange after the company failed to publish its annual results on time.

The Belfast-based company, which owns the historic shipyard where the Titanic was built, said audited accounts were delayed due to ongoing talks with its auditors over how to account for revenues of some of its “multi-year and complex” contracts.

This meant it missed the deadline to publish its results by June 30 and it has therefore temporarily suspended trading of its shares on the Aim market.

Harland & Wolff said: “Given the multi-year and complex nature of some of the contracts under which the company is working, the company has been in extensive discussions with its auditors to agree the method of accounting for revenues throughout the duration of a build programme.”

It said the group has recently agreed on the treatment of revenues with its auditors and aims to publish results next week, at which the point the shares suspension is expected to be lifted.

In unaudited financial results for 2023, released on Monday, it posted a pre-tax loss of £43.1m, narrowed from losses of £70.8m in 2022.

Revenues more than trebled to £86.9m from £27.8m the previous year.

French stock market gains on bet Le Pen won't win majority (10)

Facebook owner accused of breaking EU’s competition rules

The European Union has accused Facebook-owner Meta of breaching the bloc’s new digital competition rulebook by forcing Facebook and Instagram users to choose between seeing ads or paying to avoid them.

Meta has been giving European users the option since November of paying for ad-free versions of Facebook and Instagram as a way to comply with the continent’s strict data privacy rules.

Desktop browser users can pay about €10 a month while iOS or Android users will pay roughly €13 to avoid being targeted by ads based on their personal data.

The US tech giant rolled out the subscription option after the European Union’s highest court ruled that under strict EU data privacy rules, Meta must first get consent before showing ads to users.

The European Commission, the EU’s executive arm, said preliminary findings of its investigation show that Meta’s “pay or consent” advertising model was in breach of the 27-nation bloc’s Digital Markets Act.

The commission said Meta’s model does not allow users to exercise their right to “freely consent” to allowing their personal data to be used to target them with online ads.

The commission had opened its investigation shortly after the rulebook, also known as the DMA, took effect in March.

It is a sweeping set of regulations aimed at preventing tech “gatekeepers” from cornering digital markets under threat of heavy financial penalties.

French stock market gains on bet Le Pen won't win majority (11)

Mortgage borrowing halves as interest rates bite

Mortgage borrowing halved in May, according to new Bank of England figures, as interest rates remain at their highest level in 16 years.

The total value of mortgage debt that home buyers borrowed halved in May to £1.2bn from £2.2bn in April, as interest rates stood 5.25pc this month.

The number of mortgage approvals for house purchases also dipped in May, to 60,000 from 60,800 in April, which economists said “likely reflects the recent rise in mortgage rates since the start of the year”.

However, Ashley Webb, UK economist at Capital Economics, said the data “provided a bit further evidence that the drag from higher activity is starting to fade”.

He said: “Housing activity and prices will probably flatline at best over the coming months, but our forecast that interest rates will be first cut in August may support a renewed pick-up later this year.”

Thomas Pugh, economist at RSM UK, added: “The reduction in mortgage approvals, from 60,800 to 60,000, is probably a response to the recent increase in mortgage rates.

“However, as the 0.2pc monthly rise in the Nationwide house price index for June showed, the housing market is still recovering gradually.”

French market rally falters as far-Right dominates election

France’s stock markets have given back some of their gains Marine Le Pen’s National Rally looks on track to be the largest party in the nation’s parliament.

The Cac 40 in Paris was last up 1.4pc, having surged by as much as 2.8pc in early trading amid relied that the far-Right looked likely to fail to secure a majority.

In the debt marker, French government borrowing costs have moved higher after falling in early trading as investors questioned whether there could yet be more turmoil.

French 10-year bond yields were up four basis points to 3.34pc, although the gap between French debt and its German equivalent has narrowed in a sign of that concerns over the government’s finances have lessened.

The euro was up 0.2pc against the pound at 84.9p and was up 0.5pc against the dollar at $1.077.

Vasu Menon, managing director of investment strategy at OCBC, said: “Investors are concerned that if the (RN) wins a majority, this could set the stage for France to clash with the EU, which could disrupt Europe’s markets and the euro sharply.”

Tony Sycamore, market analyst at IG, added:

There is a sense of relief that the first round of the French elections weren’t as comprehensively in Le Pen’s favour as the polls indicated.

This raises hopes that the National Rally won’t win an outright majority, nor be in a position to open the purse strings, a proposition which had the French bond market and the euro looking nervously over their shoulders.

Travellers avoiding Paris ahead of Olympics, warns Air France

Air France-KLM warned that the Olympic Games would lead to a drop in revenues of up to €180m (£150.9m) as a result of a decline in travel to Paris over the summer.

Some 15m visitors are predicted to attend the Games, including two million from abroad, according to the Centre for Law and Economy of Sport (CDES), which has been monitoring the Paris Games for the IOC and the Paris 2024 organisers.

But there have been concerns that the Games may keep other travellers from visiting Paris, which is a major tourist destination during the summer.

The airline said:

International markets show a significant avoidance of Paris.

Travel between the city and other destinations is also below the usual June-August average as residents in France seem to be postponing their holidays until after the Olympic Games or considering alternative travel plans.

Air France-KLM said it has no plan to scale back capacity, despite the estimates of negative impact on its revenues for the June until August 2024 period.

French stock market gains on bet Le Pen won't win majority (12)

Manufacturers ‘hoping to build on’ expected interest rate cuts

Britain’s manufacturing sector will aim to build on its latest expansion as interest rates fall and exports recovery, analysts have said.

Glynn Bellamy of KPMG, said:

Evidence of heightened and stubborn inflation in the manufacturing sector remains and continues to impact prices, including logistics cost due to global shipping constraints.

But despite the ongoing inflationary challenge, there is good news for the UK manufacturing sector as orders are growing, as is related production.

Businesses will be hoping to further build on this with a stabilisation of inflation, interest rates reduction, and an increase in orders for export over the coming months.

Richard Powell, partner at MHA, added: that interest rates “remain stubbornly high, and manufacturers are sitting on their hands until they are sure that the cuts will happen”.

Money markets predict the Bank of England will begin to cut interest rates no later than November, with a 64pc chance of a cut in August.

Manufacturing grows despite highest cost inflation in 17 months

Britain’s manufacturing sector expanded for the second month in a row, according to a closely-watched survey, amid increasing demand in the UK.

The S&P Global UK manufacturing purchasing managers’ index (PMI) delivered a reading of 50.9 in June, down slightly from May’s 22-month high of 51.2. A reading over 50 indicates expansion.

Optimism among bosses stayed close to May’s 27-month high, even as companies battled with costs that rose for a sixth successive month and at the quickest pace since January 2023.

Rob Dobson, director at S&P Global, said:

The UK manufacturing sector is enjoying its strongest spell of growth for over two years, with June seeing output and new order growth sustained at robust rates similar to May’s recent highs.

The performance of the domestic market remains a real positive, providing a ripe source of new contract wins.

In contrast, the ongoing weak export performance is concerning, with manufacturers reporting difficulties in securing new
business in several key markets including the US, China and mainland Europe.

Although June also saw manufacturers maintain a relatively high degree of optimism towards the future, this was not sufficient to lessen their focus on cost minimisation and cash flow protection.

China stocks rise as manufacturing picks up

China stocks rose after a private sector survey showed China’s manufacturing activity grew at the fastest pace in more than three years.

The Shanghai Composite index was up 0.9pc and the blue-chip CSI300 index was up 0.5pc as the the Caixin/S&P Global manufacturing PMI rose to 51.8 in June from 51.7 in the previous month, marking the fastest gain since May 2021.

It also surpassed analysts’ forecasts of 51.2, indicating the health of the sector remained robust.

Hong Kong market was closed for a holiday on the day.

Yields on China’s 10-year and 30-year treasuries rose, after China’s central bank said it would borrow treasury bonds from some primary dealers in open market operations in the near future, in what traders and analysts believe is a move to stabilise plummeting yields.

Boots boss to step down after six years

The boss of UK high street health and beauty chain Boots has announced plans to stand down after six years in the top job.

Managing director Sebastian James has handed in his notice to take up a role in the healthcare sector.

Boots, which is owned by US-listed giant Walgreens Boots Alliance, said Mr James will remain with the group until November. It has kicked off the process to find his successor.

It is thought Mr James is leaving to take on a role at a European eye surgery business.

He has been in the top job at Boots in the UK since 2018, having previously headed up the electricals retailer Dixons, which has since been renamed Currys.

During his time at Boots, he has overseen 13 consecutive quarters of market share growth, according to the company.

But his decision to quit comes amid reports that Walgreens has once again put plans on ice to sell or float the Boots chain.

Mr James said:

It has been a pleasure to lead this fantastic company and support its transformation during my time as managing director.

Now in its 175th year, Boots has shaped how people access health and beauty products on the high street and I am proud to have been part of a business that continues to hold a critical role at the centre of the UK health and beauty sectors.

French stock market gains on bet Le Pen won't win majority (13)

Stocks in ‘relief rally’ as chances of Frexit diminish, say economists

French bonds and stocks have rallied because the chances of France leaving the EU, known as Frexit, have diminished after the first round of the country’s parliamentary elections, according to economists.

Mohit Kumar, chief Europe economist at Jefferies, said:

The result is probably better than feared, but not as good as the status three weeks ago pre elections.

Last week we had argued that a minority far-Right government would probably be the sweet spot for the markets and present a buying opportunity.

We could still be looking at the next few years of political paralysis in France with a stalling of the reform process. However, any fears of Frexit or a euro area breakup would be unfounded.

With the result still uncertain for the second round, we are not in a rush to buy France and French names.

However, an event risk is likely out of the way with an even more reduced probability of a Frexit scenario (which was not part of our scenario bucket anyway, but there were understandable fears in the market).

He added that the immediate reaction “is one of a relief rally” because result means “neither far-Right nor the far left would have a free mandate to implement extreme policies”.

Property stocks help push FTSE 100 higher

London stocks kicked off the week higher amid gains for property shares and gains in European markets.

The blue-chip FTSE 100 was up 0.4pc following a four-day losing streak. The midcap FTSE 250 was up 0.6pc.

Over the weekend, the first-round voting in France’s shock snap election was won by the far-Right, although it looks uncertain as to whether they would gain a majority.

Fiona Cincotta, senior market analyst at City Index, said:

There’s just optimism that maybe the French election didn’t pan out so far as badly as feared. And that’s lifted the mood across (the continent).

We’ve also got that optimism stemming from Friday’s US core PCE and that the Federal Reserve might start cutting interest rates sooner.

The personal consumption expenditure report in the US on Friday showed that inflation was in line with expectations.

In the UK market, property stocks gained as much as 1.8pc after the lender Nationwide said house prices showed a small gain in June from May, even as higher interest rates impacted the sector.

Real estate investment trusts (REITs) gained as much as 2pc.

Meanwhile, Anglo American slipped 3.2pc to the bottom of the FTSE 100 after the miner said it had suspended production at its Australian metallurgical coal mine after an underground fire ignited there on Saturday.

French stocks lead Europe as far-right expected to be denied majority

French shares lead gains in European markets after the far-right National Rally party’s historic gains in parliamentary elections were smaller than polls had suggested.

France’s blue-chip Cac 40 index jumped 2.6pc to lead gains among regional markets, with the country’s main lenders including BNP Paribas, Societe Generale and Credit Agricole advancing between 4.8pc and 7.9pc.

That helped the Europe-wide Stoxx 600 index rise 1pc, after four consecutive sessions of losses.

The National Rallyand allies had 33pc of the vote, followed by a leftwing bloc with 28pc and President Emmanuel Macron’s centrists with just 20pc, but the final result will depend on days of horsetrading before the July 7 run-off.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said the market reaction was mostly a case of “buy the rumour sell the fact” amid chatter that National Rally may not secure an absolute majority in the second round.

The Cac 40 closed at its weakest level in more than five months on Friday amid concerns about France’s fiscal discipline under the new government.

Among single stocks, Atos climbed 11.7pc as the French technology company reached an agreement with a group of banks and bondholders on terms for its debt restructuring.

Nestle rose 1.1pc after its boss said in an interview to a local weekend paper that the Swiss food giant is targeting stable growth in sales volumes from the second quarter throughout the remainder of the year as cost inflation eases.

French stock market gains on bet Le Pen won't win majority (14)

National Rally victory ‘less convincing’ than polls suggested

National Rally secured a “less convincing victory” than it would have hoped for, analysts have said, as the euro pushed higher and French stocks surged.

Emmanuel Macron’s centrist alliance and left wing parties are now considering pulling candidates from the second round of voting to ensure National Rally is denied an outright majority in parliament.

Deutsche Bank analyst Jim Reid said:

The biggest shock in Europe on Sunday, after a hugely anticipated battle, was that England football team managed to find a way of winning through in what was one of the most woeful and undeserved victories of all time.

As this was unfolding the first round of the French elections perhaps delivered a slightly less convincing victory for the far-right than final polls suggested and with other parties now seemingly open to form alliances in the second round, this is likely to further reduce the far-right’s chance of an overall majority in parliament.

This has helped the euro to move 0.4pc higher overnight.

French stocks surge as Le Pen expected to miss majority

The French stock market is on track to make its biggest single day leap in nearly two years after the parliamentary election results indicate the far-right National Rally could miss out on a majority.

The Cac 40 leapt 2.6pc as trading began, which would be its biggest gain since November 2022 if it holds until markets close.

UK markets jump after first round of French election

Stock markets in London began the week higher after the French election appeared to indicate Marine Le Pen’s National Rally may struggle to form a majority in parliament.

The FTSE 100 rose by 0.7pc to 8,221.58 as it was also supported by Nationwide figures showing house prices rose for a second month in a row in June.

The domestically-focused FTSE 250 gained 0.4pc to 20,405.32.

French debt pain eases as Le Pen could miss out on majority

The premium being paid to buyers of French debt has fallen to its lowest level in two weeks after the parliamentary elections appeared to show Marine Le Pen’s far-right National Rally will struggle to for a majority.

The difference between the yields on French and German 10-year bonds, known as the spread, has dropped by more six basis points to less than 73 basis points.

The yield is the return promised by governments or companies to buyers of its debt.

Before the vote was called by Emmanuel Macron, the spread between French and German bonds was 53 basis points.

France’s 10-year bond yield was down about three basis points to 3.26pc. Germany’s was up four basis points to 2.53pc.

Boeing agrees $8.3bn takeover of supplier blamed for Max aircraft crisis

Boeing and Airbus have reached terms to divide up Spirit AeroSystems, the fuselage and wing supplier at the centre of the crisis around the 737 Max airliner.

Our transport industry editor Christopher Jasper has the details:

Boeing will pay $4.7bn (£3.7bn) for Spirit, which made the door plug that blew out of a Max plane in January, with the value of the transaction rising to $8.3bn including assumed debt.

Airbus will acquire assets involved predominently in the production of its own planes for a nominal sum of $1, while receiving $559m in compensation from Spirit.

Among those parts of Spirit bound for Airbus is the former Short Brothers plant in Northern Ireland responsible for making wings for the A220 jet.

Taking Spirit in house is a key plank of Boeing’s bid to eliminate manufacturuing defects and improve quality control as it battles to address the safety crisis around the Max and restore the reputation of its best-selling model.

Spirit was spun off from Boeing in 2005 as part of a cost-cutting drive which many in the industry blame for a loss of oversight over the production process and ultimately for January’s near-tragedy involving the door plug on an Alaska Airlines jet.

Boeing boss Dave Calhoun Monday that the deal is in the best interests of the flying public, his company’s airline customers, employees and “the country more broadly.”

French stock market gains on bet Le Pen won't win majority (15)

House prices rise despite high interest rates

House prices have edged up for the second month in a row, according to a closely-watched survey, as the market still grapples with high borrowing costs.

Property values rose by 0.2pc in June, the Nationwide house price index showed, following a rise of 0.4pc in May.

It meant the average home was worth £266,604, which was 1.5pc higher than the same month last year.

Robert Gardner, Nationwide’s chief economist, said:

Housing market activity has been broadly flat over the last year, with the total number of transactions down by around 15pc compared with 2019 levels.

Transactions involving a mortgage are down even more (nearly 25pc), reflecting the impact of higher borrowing costs. By contrast, the volume of cash transactions is actually around 5pc above pre-pandemic levels.

While earnings growth has been much stronger than house price growth in recent years, this hasn’t been enough to offset the impact of higher mortgage rates, which are still well above the record lows prevailing in 2021 in the wake of the pandemic.

For example, the interest rate on a five-year fixed rate mortgage for a borrower with a 25pc deposit was 1.3pc in late 2021, but in recent months this has been nearer to 4.7pc.

In a positive sign for the market, three of the UK’s biggest lenders cut their fixed mortgage rates in recent days in anticipation of interest rate cuts after the election.

Euro hits highest level since Marcon called French elections

The euro was last up 0.2pc against the pound amid signs Marine Le Pen’s far-right party will struggle to win an outright majority in French elections.

The single currency was up 0.6pc against the dollar to $1.078, its highest since the parliamentary vote was called.

Most Asian shares also rose overnight, with Japanese and South Korean indexes both gaining.

Charu Chanana, a market strategist for Saxo Capital Marketstold Bloomberg: “We are starting off in Asia with that sense of relief that the far-right parties did not get the kind of majority that was feared.”

Good morning

Thanks for joining me. French markets and the euro bounced back in early trading amid signs that Marine Le Pen’s National Rally might not be able to secure a majority in France’s parliamentary elections.

The euro was higher and French bond futures also made gains, despite Ms Le Pen declaring her party had “practically wiped out” Emmanuel Macron.

5 things to start your day

1) Mysterious deaths cast a shadow over Sweden’s $12bn electric car battery champion | Northvolt struggles to scale up to rival China following accidents and production delays

2) Vast salt caverns to store hydrogen under former Royal Navy base | Natural gas reserves will be used for emergencies to plug gap in renewables’ production

3) Interest rates could rise as threat of inflation still looms | Top central bank warns ‘it is too soon to declare victory’ against price increases

4) British graduates suffer as internships dry up in wider jobs slowdown | High borrowing costs and wage pressures force white-collar employers to slow hiring

5) Labour’s net zero hopes threatened by plunge in factory apprenticeships | Drop in people starting manufacturing courses by almost half risks skill shortage

What happened overnight

The euro rose overnight after the far-right National Rally looked unlikely to be able to form a majority despite making strong gains in first-round of its parliamentary elections.

Polling agencies suggest the National Rally might win a majority in the lower house of the parliamentary, but the outcome is uncertain and the voting system is complex.

The euro rose to nearly 85p from 84.7p.

Meanwhile, Asian stocks were mostly higher on Monday after Japan and China reported data reflecting relatively sluggish growth for Asia’s two largest economies.

Japan’s benchmark Nikkei 225 added 0.3pc to 39,693.29 after a quarterly survey by the Bank of Japan, called the “tankan,” showed a modest improvement in confidence among the country’s largest manufacturers in the April-June quarter.

However the government downgraded its estimate for growth in the first quarter of the year, to a minus 2.9pc annual rate from the earlier figure of minus 1.8pc.

The Shanghai Composite climbed 0.3pc to 2,976.64 after a survey of factory purchasing managers reported over the weekend showed conditions remained in contraction for a second straight month.

Hong Kong markets were closed for a holiday.

Australia’s S&P/ASX 200 shed 0.3pc to 7,744.20. South Korea’s Kospi edged 0.2pc higher to 2,802.87 after a private-sector survey showed South Korea’s factory activity was the best since April 2022.

Related Topics

  • UK economy,
  • FTSE 100,
  • Pound,
  • Dow Jones Industrial Average,
  • Cost of living crisis,
  • Global economy
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French stock market gains on bet Le Pen won't win majority (2024)

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