Paris Stock Exchange rebounded with a 0.11% gain, closing at 8111 points, despite earlier losses. Key contributors to this rise included Pernod Ricard and Saint-Gobain. Meanwhile, U.S. markets saw modest gains after six days of decline, influenced by trade policy concerns from Donald Trump. Anticipation surrounds upcoming inflation data, with U.S. PCE inflation at 2.5%. European markets reacted negatively, while corporate earnings showed mixed results, notably a significant drop for Teleperformance and a plunge in Casino’s stock.
The Paris Stock Exchange Sees Last-Minute Rebound
The Paris Stock Exchange experienced a dramatic turnaround, closing the session with a modest gain of 0.11% at 8111 points, despite spending most of the day in the red—starting with a decline of nearly 1%. This recovery was notably bolstered by strong performances from Pernod Ricard, which rose by 2.4%, and Saint-Gobain, climbing 1.9%. However, the Paris index has slipped 0.8% over the week while still managing a substantial increase of about 2.5% throughout February.
In contrast, across the Atlantic, major indices such as the Nasdaq, Dow Jones, and S&P500 saw gains between 0.3% and 0.4%. This rebound concluded a streak of six consecutive declining sessions, which were marked by a notable downturn in speculative assets like Nvidia and Tesla, which faced losses ranging from 6% to 20% due to rising concerns over global growth, fueled by recent comments from Donald Trump.
Impact of Trade Policies and Inflation Data
Trump’s announcement of an additional 10% tariff on Chinese goods effective March 4 has raised alarm bells, especially as it appears that European products may also face increased tariffs, although many analysts doubt the feasibility of such a move. China’s Commerce Minister has vocally opposed this decision, signaling potential countermeasures to safeguard the country’s interests.
Market analyst Christopher Dembik from Pictet Asset Management points out that the implications of the trade war have been largely overlooked by the stock market until now, emphasizing its inevitable resurgence in discussions. The repercussions were palpable in Asian markets, with Tokyo experiencing a drop of 2.9% and Hong Kong over 3.2% on Friday.
As investors await crucial inflation data, the upcoming release of the PCE index in the U.S. and the CPI in Germany is highly anticipated, especially with the European Central Bank’s monetary policy meeting looming. Recent figures show U.S. PCE inflation at 2.5%, aligning with expectations, while core inflation has slightly decreased to 2.6%. In Germany, the CPI is expected to remain unchanged at 2.3% year-over-year for February.
Additionally, a surprising 0.2% decline in American household consumption expenditures in January, contrasted with a 0.9% rise in incomes, has raised eyebrows among analysts. In France, consumer prices are projected to rise by 0.8% year-on-year in February, marking a significant drop below 1% for the first time since early 2021, according to provisional estimates from Insee.
In the bond markets, yields continued to ease, with the yield on 10-year German government bonds decreasing to 2.395%, while French bonds remained stable around 3.136%. The yield spread between Bunds and French OATs has stabilized near 72/73 basis points. Meanwhile, U.S. Treasury yields hovered around 4.254%, indicating a potential recession risk as the yield curve inverts.
Currency traders, driven by risk aversion, have sought refuge in the dollar, resulting in a dip for the euro, now trading at approximately $1.04. In oil markets, Brent crude fell by 1% to about $73.1 per barrel.
On the corporate front, Teleperformance saw a significant drop of 7.5% after reporting an adjusted net income of 807 million euros. Meanwhile, Saint-Gobain announced an operating profit increase of 4.37 billion euros. Casino’s stock plunged by 15% after revealing a net income from continuing operations of 2.17 billion euros, despite a decrease in adjusted EBITDA. Lastly, Oddo BHF has reaffirmed its ‘outperform’ rating for Axa, slightly raising its price target following favorable results for 2024.