The Paris Stock Exchange is experiencing ongoing declines due to escalating trade tensions, particularly following concerns over potential U.S. tariffs on European goods. As of Friday morning, the CAC 40 index has fallen 2.2% this week. Investor sentiment remains low amidst uncertainty regarding the U.S. economy and a lack of consensus on raising the debt ceiling. Meanwhile, precious metals like gold are seeing increased demand, and oil prices are showing slight gains.
Paris Stock Exchange Faces Continued Decline
The Paris Stock Exchange is bracing for another challenging morning on Friday, following a turbulent week that has highlighted rising trade tensions, casting doubts on global economic stability.
As of 8:15 AM, the CAC 40 index’s March futures contract has dipped by 70.5 points, now at 7925 points, indicating a continuation of the previous day’s downward trend.
Investor Sentiment Weighed Down by Trade Tensions
The financial markets are absorbing the impact of a week characterized by escalating conflicts between the United States and its key trading partners. Recently, Donald Trump’s warning of a potential 200% tariff on European alcoholic beverages has rekindled fears among investors regarding the implications of such tariffs.
In Europe, worries about the ongoing trade crisis and economic forecasts have overshadowed any optimism surrounding a potential stimulus plan for the continent. Currently, the CAC 40 index is down approximately 2.2% for the week.
In this climate of uncertainty—where tariffs seem to follow one after another—the health of the U.S. economy is increasingly under scrutiny, and investors are beginning to question the likelihood of the U.S. sidestepping a recession.
Despite the release of relatively optimistic inflation data on Wednesday, which should have been a focal point for the week, the market quickly dismissed it, as investors brace for potential inflationary pressures stemming from trade conflicts.
The New York Stock Exchange closed in negative territory once again on Thursday, driven down by significant sell-offs in the technology sector. The Dow Jones experienced a 1.3% decline, while the Nasdaq Composite dropped nearly 2%, heavily impacted by losses in the ‘FANG’ stocks.
Additionally, the S&P 500 has entered correction territory, now 10% below its recent peaks, and is on track for its fourth consecutive week of losses, marking its most severe correction since 2023, as noted by Deutsche Bank analyst Jim Reid.
However, futures contracts indicate a potential rebound for major indices at Friday’s opening, with projected increases between 0.4% and 0.7%. The consumer confidence index from the University of Michigan, scheduled for release this afternoon, could add to market jitters, with expectations of a further decline in household sentiment.
Moreover, Wall Street is facing additional pressure due to the lack of a consensus on raising the U.S. debt ceiling ahead of Saturday’s deadline. The Republican-controlled House of Representatives has passed a temporary budget measure aimed at avoiding a federal government shutdown until September, but it still requires Senate approval before the impending midnight deadline.
In the bond market, the yield on ten-year Treasuries is retreating toward 4.27%, reflecting a broader trend of risk aversion among investors. Meanwhile, the yield on three-month Treasury bills stands at 4.30%, indicating an inverted yield curve—a phenomenon often associated with looming recessions.
During recessionary periods, precious metals typically see increased demand, and traders are returning to gold, with April contracts recently surpassing $3,000. The oil market is also showing positive trends, with Brent crude rising 1% to $70.6 per barrel and West Texas Intermediate (WTI) gaining 1.1% to $67.3, marking an expected weekly increase of around 0.3%.