The Paris Stock Exchange showed resilience with a 0.3% gain, driven by strong performances from companies like Eurofins Scientific and CapGemini, despite market volatility influenced by DeepSeek’s announcements. While Nvidia’s stock dropped 17% due to skepticism about AI investments, French household confidence improved. Investors are monitoring upcoming earnings reports from major firms, while corporate developments include Getlink’s revenue decline and LVMH’s stake buyback from Stella McCartney.
Paris Stock Exchange Shows Resilience Amid Market Volatility
The Paris Stock Exchange opened on a positive note this morning, gaining 0.3% and hovering around 7930 points. This upward trend is primarily driven by strong performances from companies such as Eurofins Scientific (+2.7%), CapGemini (+2.2%), and Teleperformance (+2.1%). However, a sense of caution prevails following the recent market turbulence triggered by DeepSeek’s announcements, which has made investors hesitant to take risks ahead of significant upcoming meetings.
Despite the unsettling developments, the Paris market demonstrated surprising resilience yesterday, experiencing only a minor decline of less than 0.3%, closing at 7906 points. In contrast, Wall Street faced a more severe setback, with the Nasdaq plummeting 3.1% last night—the largest drop since December 18—which wiped out its annual gains.
Impact of DeepSeek on the Technology Sector
DeepSeek, a new conversational AI agent from China, has made waves in the technology sector, being touted as a cost-effective alternative to ChatGPT. This disruption has raised critical questions among investors regarding the necessity of massive investments in AI, with some projections estimating that spending in this area could reach $1 trillion in the near future. Analysts from Deutsche Bank note that even staunch supporters of AI are beginning to reassess the value of these expenditures.
The repercussions of this skepticism were felt most acutely by Nvidia, the leading AI chip manufacturer, which saw its stock plummet by 17% last night, resulting in a staggering $600 billion loss in market value—the largest single-day drop ever recorded on Wall Street. Some market experts are drawing parallels to the tech stock overvaluations that precipitated the Internet bubble burst in 2000.
In light of these market shifts, the CBOE VIX index, commonly known as the “fear gauge,” surged 21%, indicating heightened investor anxiety. As several pivotal events loom on the horizon, including the Federal Reserve’s monetary policy announcement and the European Central Bank’s meetings, volatility is anticipated to remain elevated.
On a more positive note, recent data reveals a rebound in French household confidence for January, with the Insee’s synthetic indicator rising three points to 92, although it still lags behind its long-term average of 100. In the bond market, the yield on ten-year U.S. Treasury bonds is approaching 4.56%, the lowest in a month, while German Bunds are easing towards 2.55% and French OATs at 3.28%. Furthermore, gold prices are inching closer to last October’s historical highs, with the current trading price around $2,743.
As the week progresses, investors will be keeping a close eye on corporate earnings reports from major players such as Boeing, GM, Starbucks, and SAP, hoping for positive surprises to restore confidence in the tech sector. Anticipation is building for upcoming reports from Microsoft, Meta, Tesla, and Apple later this week.
In corporate news, French infrastructure group Getlink announced a revenue of over 1.61 billion euros for 2024, reflecting a 12% decline at constant exchange rates compared to the previous year, largely due to reduced contributions from ElecLink. Meanwhile, luxury powerhouse LVMH revealed that British designer Stella McCartney has opted to buy back the minority stake held by the group in her eponymous brand after over five years of partnership. Additionally, Quadient has forged a partnership with Buzz Bingo, the UK’s largest bingo gaming operator, to install automated Parcel Pending lockers in 35 of its clubs, with plans for further expansions in the future.