Paris Stock Exchange faces a significant decline of 1.7%, impacted by major losses in companies like EssilorLuxottica and BNP Paribas. Investors are worried about new tariffs announced by Donald Trump, which could lead to a trade war, especially affecting China and the EU. Financial markets globally reacted negatively, with sharp drops in Asia and anticipated losses on Wall Street. Despite this turmoil, eurozone PMI indices showed some improvement, while commodity prices displayed mixed trends.
Paris Stock Exchange Takes a Hit
The Paris Stock Exchange is experiencing a significant downturn this morning, plummeting by 1.7% to approximately 7730 points. This decline is primarily driven by substantial losses in major companies such as EssilorLuxottica (-5.3%), BNP Paribas (-3.5%), and Bureau Veritas (-3.4%).
Trade Tariffs Spark Market Concerns
Investors are grappling with the implications of new tariffs introduced by Donald Trump, which could potentially ignite a trade war with far-reaching consequences for the global economy. In a recent address from the White House, Trump detailed a range of measures that impose minimum base tariffs of 10%, with higher rates targeting specific nations.
According to the tariff structure presented, China faces a staggering 34% tariff, while the European Union will incur a 20% rate. Other countries, including Japan (24%), India (26%), Vietnam (46%), and the United Kingdom (10%), are also affected, although Canada and Mexico remain exempt for now.
Analysts express concern over the aggressive stance toward China, given its pivotal role in the global economic landscape. There is a prevailing fear that this protectionist approach may escalate tensions, prompting swift retaliatory actions from affected nations.
With the new tariffs set to be implemented on April 5 and 9, the window for meaningful trade discussions is alarmingly narrow. Dan Ives, a prominent analyst at Wedbush Securities, describes this scenario as “the worst among all the worst possible scenarios.”
Experts have cautioned that such tariffs could lead to inflationary pressures for both consumers and businesses within the United States, potentially stunting economic growth by disrupting international trade. Deutsche Bank estimates that these measures could reduce U.S. economic growth by 1% to 1.5% this year while elevating core inflation by a similar margin.
Financial markets have reacted sharply to Trump’s announcement. In Asia, the Tokyo Stock Exchange dropped over 3.3% by the end of the session, with export values feeling the brunt of this negative sentiment. The Hang Seng index in Hong Kong experienced a smaller decline of 1.9%.
On Wall Street, where indices had previously closed on a high note before Trump’s decree, futures for major New York indices predict a drop of between 2.2% and 3.5% at Thursday’s opening. Such declines could push the S&P 500 back into correction territory, reminiscent of its status from a month ago.
Amidst this turmoil, investors might find some solace in the PMI indices released this morning. The HCOB composite PMI index for overall activity in the eurozone rose from 50.2 in February to 50.9 in March, marking its highest level since last August and indicating the strongest growth in the region’s activity in seven months.
In France, however, the HCOB composite PMI index fell from 45.1 in February to 48 in March, reflecting a seventh consecutive monthly decline in private sector activity, albeit the weakest contraction since last October.
In commodity markets, Brent crude is down nearly 1% in London, trading around $72.7, while gold continues its upward trend towards $3130 an ounce with a 0.5% increase. Bitcoin, on the other hand, has dropped by 1.3%, hovering around $83,600.
In corporate news, Sanofi has announced that the U.S. FDA has granted orphan drug designation to rilzabrutinib for treating two rare diseases: warm autoimmune hemolytic anemia and IgG4-related disease. Additionally, Kering Eyewear has signed an agreement with two Italian eyewear manufacturers, planning to acquire 100% of the share capital of Visard and a minority stake in Mistral, with a potential full acquisition by 2030.
Lastly, Eurofins Scientific, which saw a gain of 3.8% on the CAC, has completed a partial refinancing of its hybrid bonds, joining many issuers in this trend amid decreasing interest rates.