The Paris Bourse is set to open higher on Monday morning, as market participants overcome their fears about the French political situation following the more contentious than expected results of the legislative elections.

At around 8:15 a.m., the 'future' contract on the CAC 40 index - July delivery - climbed 217.5 points to 7710 points, suggesting that the session could start not far from the 7700-point threshold.

Initial estimates put the RN and its allies in the lead, with over 33% of the vote, ahead of the Nouveau Front Populaire (28%) and Ensemble, the presidential coalition (20.8%).

The prospect of a divided Assembly was considered the most likely, and this scenario should not unduly upset the markets, which had anticipated it well.

"On the basis of the information we have at this stage, the probability of the formation of a government led by the RN has been significantly reduced", even emphasizes Jack Allen-Reynolds, economist at Capital Economics.

This stalemate will nevertheless force Emmanuel Macron to cohabit with an a priori hostile Assembly during the last three years of his second term.

"The next government will be less willing and less able to reduce France's budget deficit than the outgoing government", worries Jack Allen-Reynolds.

Against this backdrop, the spread between French 10-year OAT yields and the German benchmark rate for the same maturity - which reached almost 85 basis points on Friday - could widen further.

Market volatility is unlikely to reach the levels seen following the European election results and the announcement of the dissolution of the European Commission three weeks ago.

Investor attention is likely to shift quickly from the French election results to the numerous economic indicators scheduled for later in the week.

Tomorrow, traders will learn of the latest inflation figures for the eurozone, followed by the ISM services index for the US on Wednesday and the monthly US employment report, scheduled for Friday.

Published this morning, China's manufacturing PMI for June came in at 49.5, unchanged from May, according to data from the State Bureau of Statistics (BES).

Still below the 50-point threshold indicating a contraction in activity, this indicator 'highlights the persistent weakness of the economy' in the view of Commerzbank analysts.

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