Stock market: French banks jump after Michel Barnier's appointment

After weeks of unbearable suspense, France finally has its new Prime Minister: Michel Barnier. To everyone's surprise, this nomination has not only impacted politics, but also the stock market. The nomination of the former European Commissioner has made the major French banks jump on the Paris Stock Exchange, giving a breath of hope to investors who were waiting for this outcome.

Stock market: French banks on the rise

Certainly France is currently going through a difficult time with a real estate crisis similar to that of China. But it would seem that market speculation has taken an unexpected turn with thearrival of Michel Barnier at MatignonLast Thursday, barely had its name been announced, when the major French banks saw their stock market prices gain altitude.

General Society flew away from 3.9%, Agricultural Credit climbed from 2.1% And BNP Paribas was not left behind with a jump of 2.8%. Just that.

Meanwhile, the CAC 40 index, which was swimming in the red, reduced its losses to 0.31%.

Why such enthusiasm? It's simple, Michel Barnier is seen as a man of consensusable to navigate in a National Assembly without a majority. And the markets, for their part, love stability.

The choice of a reassuring man has dispelled fears of chaotic management of the French economy, hence this stock market recovery.

However, the real question remains: how long can this momentum last? The next few US economic indicators could well change that.

The impact of the appointment on other markets

Besides the stock market, the Barnier effect has also shaken the foreign exchange market. The euro appreciated by 0.2% against the dollarreaching a rate of 1.1103. However, on the bond side, things remained relatively stable, with the yield of the ten-year OAT at 2.932%.

As for the yield spread between French and German bonds, it remained unchanged at 70 basis points, a sort of reassuring balance for investors.

But this euphoria has its limits. International markets remain on standby ahead of the release of several crucial statistics on the American economy. The much-anticipated ADP survey could well throw a spanner in the works. According to forecasts, 144,000 jobs expected to be created in the private sector in Augustbut if this figure were to disappoint, French banks could come down from their pedestal.

So be careful of the boomerang effect of this improvement, which could turn into a simple flash in the pan.

Markets influenced by Barnier's appointment :

• Paris Stock Exchange: +2% to +3.9% for banks;
• Foreign exchange market: euro at 1.1103 dollars;
• Bonds: stable at 2.932%.

Even if French banks are breathing a little easier with the appointment of Michel Barnier, the 2024 Paris Olympics may not have anything to celebrate a booming economy. Between corporate bankruptcies and economic uncertainties, the future remains uncertain.