Paris Stock Exchange rebounded with a 1% gain, pushing the CAC40 index toward 7,950 points, following a three-session decline. Despite the ECB’s unexpected interest rate cut, market reactions were muted. Meanwhile, disappointing earnings from major tech firms like Microsoft and Tesla affected U.S. markets, while IBM exceeded expectations. Economic indicators showed a slowdown in U.S. GDP growth and mixed results in European GDP, with France reporting increased household consumption, particularly in manufactured goods.
Paris Stock Exchange Rebounds with Notable Gains
The Paris Stock Exchange has made a remarkable comeback after three consecutive sessions in the red, achieving a notable gain of +1% that drives the CAC40 index towards the 7,950 points mark. This upward trend brings the index in line with the Euro-Stoxx50, which has risen by 0.9%, reaching a new high of 5,280 points, while the DAX40 also sets a new record at 21,720 points. Interestingly, the unexpected reduction of the ECB’s key interest rate by -25 basis points did not elicit a strong market reaction. French OATs eased by -4.5 points to 3.2700%, and Bunds dropped by -5 points to 2.5230%, as market movements had already been established prior to the ECB’s announcement. In the U.S., the ’10-year’ Treasury yield improved slightly, decreasing by -2.5 points to 4.523%.
Disappointing Earnings Reports from Big Tech
In the aftermath of Wall Street’s close, the earnings disclosures from the so-called ‘Magnificent Seven’ fell short of investor expectations, leading to a dip in the market. Microsoft saw its shares plummet by over 5% after reporting earnings per share of $3.23, slightly above the consensus estimate of $3.11. Even though its revenue of $69.9 billion exceeded the projected $68.8 billion, the market had anticipated a stronger performance.
Meanwhile, Meta experienced a modest increase of +1.9% after surpassing quarterly EPS expectations, but its revenue forecast for the first quarter was perceived as weaker than anticipated. Tesla, on the other hand, faced a loss of around 2% following disappointing EPS of $0.73, below the estimated $0.76, with revenue significantly trailing at $25.7 billion compared to the expected $27.3 billion. In contrast, IBM provided a pleasant surprise with an EPS of $4.26, exceeding the anticipated $4.12, while its revenue met expectations at $17.25 billion.
On the economic front, preliminary data from the Department of Commerce indicated a slowdown in U.S. GDP growth from 3.1% to 2.3% on an annualized basis for the fourth quarter of 2024. However, the Department of Labor reported a sharp decline in new unemployment claims, falling by 16,000 to 207,000 for the week ending January 20. The four-week moving average, which offers a clearer view of trends, stood at 212,500, reflecting a modest decrease of 1,000 from the previous week. Additionally, the number of individuals receiving regular benefits dropped by 42,000 to 1,858,000 for the week of January 13.
Across Europe, preliminary estimates revealed a GDP growth rate of 0.7% for the eurozone and 0.8% for the EU at the end of 2024, following a 0.4% increase in the third quarter. Among member states, Portugal led with a 1.5% increase, followed by Lithuania at 0.9% and Spain at 0.8%. Conversely, Ireland, Germany, and France recorded declines of -1.3%, -0.2%, and -0.1%, respectively.
In France, household consumption expenditures on goods saw a significant increase of 0.7% in volume for December, building on a 0.2% rise in November. This growth was primarily driven by a 1.9% increase in manufactured goods purchases, particularly in transport, along with a 2.5% rise in energy consumption. However, food consumption experienced a decline of -1.5%. Over the fourth quarter of 2024, household consumption continued to rise by +0.4%, with a notable acceleration in manufactured goods consumption.
In corporate news, the Crit group announced a revenue of 3,123 million euros for the entire 2024 fiscal year, marking a 23.2% increase, thus achieving its target of surpassing 3 billion euros. Stmicroelectronics reported a significant year-on-year drop in EPS of 67.5% for the fourth quarter of 2024, while Sanofi revealed an adjusted EPS of 7.12 euros, exceeding forecasts and proposing a dividend of 3.92 euros per share. Finally, Eurofins Scientific reported an EPS increase of 41% to 1.87 euros and an adjusted EBITDA growth of 13.8% to 1.55 billion euros, aligning with its targets set last October.