The Paris Stock Exchange is expected to open lower due to new U.S. tariffs on European goods, overshadowing strong earnings from Nvidia. The CAC 40 index futures indicate a decline, despite Nvidia’s impressive fourth-quarter results. Concerns about the U.S. economic outlook and an inverted yield curve raise recession fears. Oil prices are rising amid declining U.S. crude stocks, while the euro has weakened against the dollar following tariff announcements. Investors await key U.S. economic data today.
Market Outlook: Paris Stock Exchange Anticipates Lower Opening
The Paris Stock Exchange is bracing for a slightly lower opening this Thursday morning. The recent announcement of new tariffs on European goods by the United States is overshadowing the encouraging earnings results from Nvidia.
As of 8:15 AM, the CAC 40 index futures contract, set to expire in March, showed a decline of 30.5 points, landing at 8129.5 points, foreshadowing a negative start to the trading session.
Nvidia’s Impressive Earnings vs. Trade Tensions
Nvidia reported remarkable fourth-quarter earnings last night, posting earnings per share (EPS) of $0.89, surpassing the consensus estimate of $0.84. The graphics processing giant generated an impressive revenue of $39.3 billion, marking a 78% increase from the previous year.
Michael Brown, a strategist at Pepperstone, noted, “These impressive figures indicate that the excitement surrounding AI remains strong, with the chipmaker continuing to deliver outstanding results despite the recent introduction of Deepseek.” Furthermore, the report helped ease concerns about a potential bubble in AI investment spending, according to analysts at Danske Bank.
Despite these positive results, Nvidia’s stock experienced a nearly 1.5% drop in pre-market trading, primarily due to profit-taking following a robust 10% rebound over the past month. Concerns about the economic landscape, especially in the United States, have made stock markets appear more vulnerable over the past ten days.
The news from Donald Trump about imposing a 25% tariff on European products sparked minimal reaction on Wall Street. However, these protective measures reignite fears of a trade war between the U.S. and Europe, potentially impacting global economic growth. In a related development, the yield curve for U.S. Treasury bonds inverted yesterday, indicating that the largest economy in the world may be inching toward a recession.
This inversion, where short-term rates exceed long-term rates, saw three-month Treasuries yield 4.31%, surpassing the 4.25% yield of ten-year bonds. Many economists, including those at the Fed, view this as a recession warning sign.
In a mixed trading day on Wednesday, the S&P 500 index managed to end a four-session losing streak. Today, investors will focus on the second estimate of U.S. growth for the fourth quarter, which is projected to remain at 2.3%. Michael Brown cautioned, “Given ongoing concerns about the U.S. economy, any downward revision could face significant backlash, likely more so than usual for such data.”
Additionally, analysts will keep an eye on unemployment claims and durable goods orders, scheduled for release early this afternoon. In the currency market, the euro has dipped to approximately 1.0475 against the dollar following the U.S. president’s announcement of sanctions on European imports. However, traders are somewhat dismissing Trump’s threat, as he did not specify a timeline for implementing the new tariffs, which he often uses as negotiation leverage.
Oil prices continue to rise, buoyed by reports of declining crude stocks in the United States, although concerns about global demand persist. U.S. light crude (West Texas Intermediate, WTI) has increased by 0.2%, hovering above $68.7 per barrel, while Brent crude is up by 0.3%, around $72.7.