European Bond Yields Hold Steady as Political Storms Gather In France

Bridgette Randall
03 Dec, 2024
London

European markets advanced in cautious trading as investors reacted to the latest trade restrictions announced by the U.S. and growing political uncertainty in France. 

Benchmark indexes in Paris, Milan, Frankfurt, and London inched higher, but investors worried about the political instability in France.

Prime Minister Michel Barnier's minority government is facing two no-confidence votes on Wednesday after he used constitutional provisions to pass the next fiscal year budget without a vote in the parliament. 

The fallout from the most likely fall of the government on Wednesday pushes France into uncharted territory. 

According to the French election rules, the next possible earliest date for a general election cannot be before June of 2025. 

Bond investors were calm, despite the growing certainty that the eurozone's second-largest economy is heading for political chaos that could last several months or even quarters. 

Semiconductor-related technology stocks advanced after the latest trade restrictions with China were far less stringent than expected weeks ago. 

In addition, the measures provided exemptions to key allies, including Japan and the Netherlands. 

After the announcement by the U.S. Commerce Department, ASML said that the new restrictions are not likely to have "any direct material impact" in the current year. 

 

Europe Indexes and Yields

The DAX index increased by 0.1% to 19,951.26; the CAC-40 index rose by 0.2% to 7,248.61; and the FTSE 100 index inched higher by 0.7% to 8,370.67.

The yield on 10-year German bonds edged higher to 2.05%, French bonds inched up to 2.90%, the UK gilts edged lower to 4.22%, and Italian bonds decreased to 3.25%.

The euro edged higher to $1.05; the British pound inched down to $1.26; and the U.S. dollar eased to 88.45 Swiss cents.

Brent crude increased $0.65 to $72.58 a barrel, and the Dutch TTF natural gas fell by €0.04 to €48.46 per MWh. 

 

Europe Stock Movers

French banks and technology stocks in the currency union were the focus in Tuesday's trading. 

Société Générale decreased 0.7% to €24.27, BNP Paribas fell 0.3% to €55.80, Credit Agricole declined 0.3% to €12.52, and AXA eased 0.4% to €32.43. 

ASML Holding NV rose 1.4% to €673.20, STMicroelectronics edged up 0.1% to €24.62, and Infineon Technologies advanced 0.2% to €31.17. 

Greencore Group plc soared 12.1% to 221.0 pence after the sandwich and the convenience food maker reported a 36% jump in its pre-tax annual profit. 

The company announced a £10 million stock repurchase plan, following a strong rise in annual profit. 

Hg Capital Trust increased 1.1% to 534.0 pence, and the company agreed to sell bookkeeping automation platform provider Dext Software Ltd. to IRIS Software Group. 

The transaction is expected to be finalized by the end of 2024. 

Worldline SA dropped 5.7% to €7.15, despite reports suggesting that the private equity firm Bain Capital may be interested in the French payment processing firm.

Worldline's stock is trading at a record low, and Bain's investment in Nexi may pose a hurdle in striking a possible deal.

Nexi SpA decreased 2.4% to €5.77. 

Assa Abloy AB jumped 1.4% to SEK 342.40 after the Swedish maker of locks, gates, and entrance automation products agreed to acquire Finland-based 9Solutions.

The company said 9Solutions generates about SEK 100 million in annual revenue, and the acquisition is going to be accretive from day one. 

A day ago, the company agreed to acquire the U.S.-based Premier Steel Doors and Frames, the maker of metal doors and frames with an annual revenue of about $40 million. 

The company expects the acquisition to be accretive from the start because of the Premier's strong operating margins.