Paris Stock Exchange is expected to open lower amid a tranquil trading session influenced by Wall Street’s closure for a national mourning. The CAC 40 index futures indicate a potential heavy opening. Market dynamics are affected by uncertainties regarding a possible trade war and the absence of U.S. investors. Despite last year’s performance, European stocks may attract renewed interest. The euro stabilizes after recent lows, while U.S. bond yields and oil prices show signs of recovery.
Paris Stock Exchange Anticipates a Calm Session
The Paris Stock Exchange is projected to open lower on Thursday morning, with expectations of a tranquil trading session. This calm comes in the wake of Wall Street’s closure for a national day of mourning in the United States, honoring the late President Jimmy Carter, who passed away at the age of 100 on December 29.
As of 8:15 AM, the January futures contract for the CAC 40 index has dropped by 20.5 points, landing at 7438 points, signaling a potentially heavy opening for the market.
Market Dynamics and Investor Sentiment
The positive momentum experienced in Paris since the start of the year waned yesterday, primarily due to uncertainties in the American stock market, which are fueled by fears of a new trade war. Reports indicate that Donald Trump plans to declare a national economic emergency to swiftly introduce ‘universal tariffs’ aimed at curbing the trade deficit.
After a stable morning, the Paris market experienced a sudden midday dip but managed to limit its losses to approximately 0.5%, closing around 7452 points by late morning. The absence of American investors is likely to restrict market movements and prompt cautious behavior among investors.
Despite last year’s lackluster performance, there may be renewed interest in European stocks as investors seek attractive buying opportunities. Barclays strategists noted that factors such as undervalued stocks, a declining euro, potential reforms in Germany, a peace settlement in Ukraine, and additional support measures in China could enhance Europe’s risk/return profile.
Additionally, the euro’s recent decline may provide a boost by presenting opportunities to invest in export-centric stocks. The overall environment remains challenging for the euro, influenced by political instability and sluggish economic growth, both of which could lead to further monetary support from the ECB.
On the foreign exchange front, the euro is stabilizing this morning around 1.0305, following a nearly three-year low against the U.S. dollar last week at 1.0265.
Meanwhile, U.S. indices concluded the previous day with mixed results (+0.2% for the Dow Jones, -0.1% for the Nasdaq) after a session dominated by losses. The release of the Federal Reserve’s last monetary policy meeting minutes did not significantly affect market dynamics. The minutes indicated that central bank officials are increasingly concerned about inflation risks, advocating for a cautious stance in upcoming monetary policy actions.
Looking ahead, the news cycle is expected to be relatively quiet, with a limited agenda for the upcoming session, except for a few key statistics, including Germany’s industrial production and eurozone retail sales.
After a notable increase yesterday, U.S. benchmark government bond yields stabilized by the end of the session, with the ten-year yield slightly easing to 4.69%. This trend is mirrored in the European market, where the yield on the ten-year German Bund has decreased to 2.52%, while the French OAT tightened to 3.35%, resulting in a spread of 83 basis points.
Finally, after pausing a recent upward trend, the oil market is attempting to regain momentum this morning, following reports of a significant drop in U.S. crude oil stocks. The price of American light crude (West Texas Intermediate, WTI) has increased by 0.2%, approaching $73.5.