Paris Stock Exchange experienced a strong start to the week, closing at 7480 points, a gain of 0.72%, driven by the luxury and banking sectors. Despite this, Wall Street showed declines. Experts express caution regarding future performance, with concerns about the CAC 40’s potential year-end rally. Investor sentiment is influenced by anticipated interest rate decisions from the European Central Bank and upcoming U.S. inflation data. In corporate news, Alstom secured significant contracts, and Air India ordered 100 Airbus aircraft.
Paris Stock Exchange Gains Momentum
The Paris Stock Exchange kicked off the week with a significant upswing, closing at 7480 points, marking an impressive gain of +0.72%. This positive trend represents the eighth consecutive session in the green, largely driven by the luxury sector, which saw Kering and LVMH rise by 3.5%. The banking sector also contributed to the gains, with Société Générale increasing by 3.1% and BNP Paribas rising by 2.5%. At one point in the afternoon, the index even surpassed the 7500 points threshold, peaking at 7511 points with an increase of 1.1%.
Market Insights and Future Projections
Despite the upbeat performance in Paris, the opening on Wall Street presented a different picture, with the Dow Jones dipping by 0.2% and the S&P 500 and Nasdaq down by 0.4% and 0.5%, respectively. Investment strategy advisor Christopher Dembik from Pictet AM noted, “As expected, there was no stock market psychodrama after the censure,” indicating that the market has dismissed fears of a potential debt crisis in France as unfounded.
However, experts remain cautious about the outlook for the Paris Stock Exchange as the year draws to a close. Dembik raises the question of whether a traditional Christmas rally for the CAC 40 is feasible, stating that it is a “complicated” scenario. He suggests that it would not be surprising for the CAC 40 to finish below the critical 7000 points mark, implying a 7% decline over the year.
Investor sentiment is further influenced by expectations surrounding the European Central Bank’s decision on interest rates, with a limited reduction of 25 basis points anticipated rather than a more aggressive cut of 50 points. François Rimeu, a senior strategist at Crédit Mutuel AM, adds that quicker rate declines may be more appropriate for the European context, yet concerns over a weakening euro are causing hesitation among central bankers.
Despite these uncertainties, euro-denominated debts are experiencing a positive session, with Italian BTPs at 3.19%, Bunds at 2.12%, and French OATs at 2.87%. The OAT/Bund spread continues to narrow, currently around 75 basis points, down from 88 points a week ago. Meanwhile, U.S. T-Bonds showed a slight deterioration with an increase to 4.188% for the 10-year note and 4.1280% for the 2-year note.
Looking ahead, investors are also preparing for the upcoming U.S. consumer price index report, set to be released on Wednesday, as it could provide key insights ahead of the Federal Reserve’s final meeting of the year. Consensus estimates suggest that U.S. inflation may have accelerated to +0.3% month-on-month in November, compared to 0.2% in October.
In the energy sector, oil prices are on the rise once again, influenced by geopolitical tensions and unrest in Syria following the downfall of President Bashar Al-Assad. However, the increase remains modest, with Brent crude oil rising by 1.8% to $72.3 per barrel.
In corporate news, Alstom has secured a contract worth nearly 520 million euros to provide SNCF Voyageurs with 35 additional RER NG trains for the Île-de-France Mobilités network. Furthermore, Alstom has signed a five-year agreement with the Southern California Regional Rail Authority for the operation and maintenance of its regional rail network, valued at approximately 515 million dollars (or 490 million euros).
Lastly, Air India has announced a firm order for 100 additional Airbus aircraft, aimed at meeting the rising demand for air travel in India, which is currently outpacing global growth.