The Paris Stock Exchange began Wednesday’s trading session with a slight drop, as the CAC40 index fell 0.4% to around 8,170 points amid ongoing global tensions, particularly regarding Ukraine. Despite a recent seven-day gain, uncertainties about potential peace talks between the U.S. and Russia persist. Investors are focused on upcoming corporate earnings reports and U.S. economic data, while oil prices rise due to geopolitical developments. Gold prices are also climbing as demand remains strong despite easing tensions.
The Paris Stock Exchange Opens Lower Amid Global Tensions
The Paris Stock Exchange kicked off the trading session on Wednesday with a slight decline, as investors hold onto hopes for a resolution to the ongoing tensions in Ukraine. The CAC40 index saw a drop of 0.4%, hovering around 8,170 points.
Market Trends and Economic Indicators
Yesterday, the Paris market celebrated a seventh consecutive day of gains, buoyed by a sense of relief regarding the situation in Ukraine. However, uncertainties linger about the forthcoming peace agreement being negotiated between Washington and Moscow in Riyadh.
With a modest increase of 0.2%, the CAC is now just about fifty points shy of its all-time high of approximately 8,259.2 points, achieved in May 2024. This upward trend has positively impacted several sectors, particularly defense stocks, as investors anticipate a rise in military expenditures in Europe due to the evolving dynamics between the United States and Russia.
As the focus shifts away from trade tensions to the geopolitical climate, investors might start to prioritize economic news in the upcoming days. Tonight, market participants will be keenly awaiting the minutes from the Federal Reserve’s recent meeting held on January 28 and 29, looking for hints regarding the timing of future interest rate adjustments in the U.S.
Following their last meeting, the Fed opted to maintain its current monetary policy to better assess inflation trends and the economic ramifications of the new administration. The CME Group’s FedWatch tool reveals that market expectations are leaning towards a rate cut in July, with a probability of 43.9%, slightly surpassing that of maintaining the current rates at 42.9%.
On the macroeconomic front, today’s reports on housing data from the United States are also anticipated. In Paris, investors are focused on corporate earnings expected later this week, hoping for positive surprises that could propel the CAC towards new record highs.
High-profile companies such as Airbus, Renault, and Schneider Electric are set to report their earnings tomorrow morning, along with Air Liquide on Friday. A close above last year’s historical peak for the CAC would indicate a confirmed bull market, particularly after a period of underperformance in 2024.
As the stock market experiences a rally, yields are stabilizing, with both OATs and Bunds showing little movement after a turbulent start to the week, currently sitting at 3.1580% and 2.4960%, respectively. The Franco-German spread is also narrowing, now below 66.5 points, raising hopes for a return to a more normalized interest rate differential around 50 points.
Oil prices have risen for three consecutive sessions, driven by a strike on a Russian pipeline by Ukrainian drones, which may impact Kazakhstan’s oil exports by as much as 30%. Brent crude from the North Sea has increased by 0.4% to $76.1, while the March contract for West Texas Intermediate (WTI) crude has also gained 0.4%, reaching $72.1 per barrel.
In the foreign exchange market, calmness prevails, while gold prices are climbing back to their peaks at $2,949, as the easing situation in Ukraine does not seem to dampen the demand for the precious metal.