[MARKET ANALYSIS] France's CAC 40 leads the rebound in European equities; UK defence names under pressure as Chancellor Healey reportedly shelves its defence spending target

• European bourses are entirely in the green, with the CAC 40 the clear outperformer as it rebounds from yesterday's woes. The main driver of Thursday's losses was the presidential debate that took place between candidates. The key focus was on how the candidates would approach France's debt problem; no consensus was agreed to on the stage on how to solve the problem, but suggestions ranged from waiving interest payments on ECB-owned debt to cutting welfare spending. Overall, Politico says no candidate pulled off a clear winner and that the presidential race remains open.
• Sectors highlight the positive bias. Consumer Products & Services top the sector pile, with Autos and Chemicals rounding out the top 3 performers. To the downside is Media, followed by Real Estate and Retail.
• Key movers include: UK defence names, FT reported that Chancellor Healey will shelve its defence spending target at October's budget; EssilorLuxottica (+3.3%), announces share buybacks of up to 5mln shares; Strabag (+10.7%), H1 revenue beat and raises its FY26 guidance; Siemens (+1.5%), upgraded to buy at Erste.
• US equity futures are mixed, with YM outperforming while the NQ lags as Nvidia pulls back from its 8.7% gains made in Thursday's session. Shares of PayPal and Marvell are falling pre-market, down 13.6% and 7.6% respectively. For PayPal, the group led by Advent and Stripe has reportedly abandoned its pursuit of PayPal, according to Bloomberg. For Marvell, its Q2 metrics only narrowly beat expectations and its gross margin guidance came in at the low end of consenus.

A politically driven equity session of a familiar type: the CAC rebounding the day after a debate-driven selloff fits the established pattern of French election risk, where OAT-Bund spread widening and domestic bank underperformance tend to lead the initial move and relief rallies follow any debate that produces no decisive shift in the race. The read-through to watch is not the index bounce itself but whether the debt debate proposals mentioned (interest relief on ECB-held debt, welfare cuts) harden into credible fiscal programmes, since that is what has historically determined whether spread widening proves durable or mean-reverts. The UK defence angle is the more idiosyncratic channel: shelving a spending target is a direct revenue-line question for the listed defence peer set, and on prior occasions of fiscal retrenchment the stocks have de-rated on the headline before recovering on contract-level detail, so the October budget document matters more than the report. Single-stock movers (Strabag on guidance, EssilorLuxottica on buyback, Siemens on an upgrade) are standard mid-session colour without broader signal. The US futures divergence, YM over NQ on an Nvidia giveback after a large single-session gain, is the routine pattern of a crowded AI leader retracing a portion of an outsized move rather than a regime signal.