Paris Stock Exchange is rebounding, with the CAC 40 index climbing above 7,400 points as investors anticipate a Federal Reserve rate cut. Following Donald Trump’s election win, the index rose 0.76%, while the DAX 40 increased by 1.7%. Major stocks like Arcelormittal and luxury brands saw gains, although Legrand and Air France-KLM faced declines. The euro appreciated slightly against the dollar, and oil prices also recovered.
Paris Stock Exchange Recovers Post-Volatility
The Paris Stock Exchange is on the rebound after navigating a particularly tumultuous trading session. The CAC 40 index has surged back above the 7,400-point mark as investors eagerly await the Federal Reserve’s decision, which is anticipated to include a rate cut announcement this Thursday evening.
Market Reactions and Investor Sentiments
In the wake of Donald Trump’s victory in the U.S. presidential election, the Paris Stock Exchange has regained its footing. The CAC 40 finished the day up 0.76%, closing at 7,425.60 points, effectively reversing the losses it faced on Wednesday. Similarly, the DAX 40 in Frankfurt rebounded impressively, closing up 1.7%, despite ongoing political uncertainty in Germany.
Market participants are currently evaluating the implications of Trump’s impending return to the White House in January. According to Berenberg, “Trump remains unpredictable, making it challenging to forecast which of his numerous electoral promises will be enacted. However, this time, his electoral success is not a surprise, and his team is prepared.” The German bank further cautions that Trump’s return could introduce significant trade and geopolitical uncertainties that may adversely affect European growth.
Eyes are particularly focused on the Federal Reserve’s upcoming meeting, where a 25 basis point rate cut is widely expected. Investors are keen to glean insights from Fed Chairman Jerome Powell’s commentary, as there are concerns that Trump’s inflationary policies could limit the Fed’s ability to adjust rates effectively.
On the corporate front, Arcelormittal led the CAC 40 with a remarkable 6.7% increase, buoyed by strong third-quarter cash flow and operating profits. Luxury brands also showcased robust performance, propelled by better-than-expected results from Tapestry and Ralph Lauren, resulting in Kering, Hermès, and LVMH posting gains of 4.2%, 3.1%, and 2.6%, respectively.
Conversely, Legrand faced a challenging day, ending the session down 7.3% after reporting disappointing results for the first nine months of its fiscal year 2024. Outside of the CAC 40, Air France-KLM saw a steep decline of 10.5% following disappointing third-quarter financial results due to unexpectedly high operating costs at KLM.
In a positive development, Exail Technologies resumed trading with a notable 9% gain, following the announcement that the General Directorate of Armament has selected Exail and Thales to supply sixteen underwater drones to the French Navy.
Meanwhile, the euro experienced a slight uptick against the dollar, rising 0.6% to 1.0791 dollars after facing a significant drop previously. The surge in American bond yields following Trump’s election has bolstered the dollar, driven by expectations of increased inflation and fiscal deficits in the U.S.
Lastly, oil prices also saw a recovery, with the January contract for North Sea Brent increasing by 0.5% to $73.30 per barrel, while the December WTI contract in New York rose by 0.5% to $72.02 per barrel.