The Paris Stock Exchange is poised for a tumultuous start as trade tensions loom, with the CAC 40 index futures down 82 points. Concerns are rising ahead of Donald Trump’s anticipated announcement of new tariffs, which could provoke retaliation from major trading partners. The market remains jittery following recent declines, and analysts warn of potential recession risks. Key employment data this week will further influence the Federal Reserve’s monetary policy, adding to market volatility.
Paris Stock Exchange Set for a Rocky Start
The Paris Stock Exchange is gearing up for a challenging opening on Monday morning, with trade-related concerns casting a shadow over market performance as we enter a week likely to be marked by volatility.
As of 8:15 AM, the future contract for the CAC 40 index, set to expire in April, has dropped by 82 points, landing at 7847.5 points. This signals a difficult start for this final session of the first quarter.
Trade Tensions and Market Volatility
This week promises to be filled with market jitters as Donald Trump prepares to announce a new set of ‘reciprocal’ tariffs on Wednesday, an event he has dubbed ‘Liberation Day for the United States.’
While some observers view these tariffs as a strategy to pressure major trading partners, investors are wary of possible retaliatory actions from nations such as Canada, Mexico, China, and the European Union.
Over the weekend, Trump emphasized his stance in a conversation with NBC, stating he was unfazed by the potential rise in car prices in the U.S. due to a 25% tariff on imported vehicles.
Last week, worries over U.S. trade policies significantly impacted stock markets. In Paris, the CAC 40 saw a decline of 1.6% over the week, while the S&P 500 marked its fifth weekly drop out of six, falling by 1.5%.
Market analysts are growing increasingly concerned about stagnation in trade negotiations, with fears of a looming recession in the United States. Current policies from the White House are predicted to have a detrimental effect on economic growth.
‘The uncertainty surrounding U.S. economic policy under the Trump administration has reached levels similar to those experienced during the pandemic,’ warn experts at J. Safra Sarasin. ‘Our models indicate that a significant external shock related to political uncertainty could lower GDP by nearly 1% within a year.’
Such factors suggest that the erratic swings observed in recent weeks may continue. The CBOE volatility index, often referred to as the ‘fear index,’ has once again climbed above the key threshold of 20 points, signaling heightened anxiety among traders.
This week is also packed with economic data, with March’s employment figures set to take center stage. These numbers could play a crucial role in shaping the Federal Reserve’s monetary policy decisions.
These employment statistics are closely monitored by the Federal Reserve and will influence timing for potential interest rate cuts. Strong employment data may be received negatively by the market, as it could signal a delay in the Fed’s support measures.
Before Friday’s employment report, market participants will also look to Wednesday’s ADP job creation report and Thursday’s weekly unemployment claims data.
As is customary in the first week of the month, the upcoming statistics are likely to have a significant impact on market sentiment. Additional indicators on the U.S. agenda include the ISM manufacturing index expected tomorrow and the services index set for release on Thursday.
In Europe, traders will get the first estimate of Germany’s inflation for March today, followed by the final PMI indices for the manufacturing sector tomorrow and the services sector on Thursday.