Paris’s stock market is thriving, propelled by the luxury sector and Wall Street’s record highs, with the CAC40 index rising 1.31% to about 7,427 points. This marks a break from six weeks of decline, despite political uncertainty following a government shift. Positive economic indicators, including job growth in the U.S. and rising consumer confidence, support investor optimism. Meanwhile, the euro strengthens against the dollar, and oil prices decline amid expectations of reduced OPEC supply.
Paris Stock Market Soars Amid Luxury Boom
The Paris stock market is experiencing a significant surge, largely driven by the luxury sector and a series of record highs on Wall Street. The CAC40 index has risen by 1.31%, reaching approximately 7,427 points. This marks the seventh consecutive day of gains, achieving a perfect five-day streak this week and representing the strongest trading performance since September 29.
Wall Street’s Impact and Economic Indicators
In the U.S., both the S&P500 and Nasdaq indices have reached their third consecutive record this week, with gains of 0.2% and 0.5% respectively. Meanwhile, the volatility index (VIX) has retreated to a complacent level around 13.00. Despite the political unrest following the censure motion that led to the fall of the Barnier government, the Paris market closed with a 0.4% gain yesterday.
With a weekly increase of 2.7%, the CAC40 has successfully ended a six-week decline, although the recent government turnover introduces a new phase of political uncertainty in France. Analysts have noted the resilience of the Paris index amid these turbulent times. Experts from Banque Richelieu have suggested that while the government’s fall and the rejection of its austerity budget are concerning, they do not necessarily indicate an imminent financial crisis similar to what was witnessed between 2010 and 2012.
Additionally, a promising sign is the decreasing France-Germany rate spread, now down to 75 basis points, which indicates a continued investor confidence for the time being. German Bunds are up by 1.2 points, while French OATs have eased slightly, reflecting a narrower spread compared to just a week prior.
In a speech last night, President Macron assured the public of appointing a new prime minister soon while confirming his intention to complete his term. As the dust settles on the political front, investors are turning their attention to key economic indicators being released today.
The U.S. Department of Labor’s monthly report revealed that 227,000 non-farm jobs were added in November, slightly surpassing economists’ expectations of around 200,000. However, the unemployment rate ticked up by 0.1 points to 4.2%, while the labor force participation rate stood at 62.5%. Notably, average hourly wages increased by 4% year-on-year.
Moreover, job creation numbers for the previous two months were revised upwards, adding a total of 56,000 jobs to September and October figures. Despite these robust statistics, T-Bonds have eased, with a current yield of 4.1700%. The probability of a rate cut on December 18 has risen to over 70%, up from 66% a week ago, according to the CME Group’s FedWatch barometer.
The preliminary consumer index from the University of Michigan indicates growing confidence, rising to 74 this month from 71.8 in November. While expectations have dipped, the assessment of current conditions has surged significantly.
In foreign exchange markets, the euro remains relatively unaffected by the political turmoil, even strengthening against the dollar this morning. However, following the NFP report, the dollar gained 0.3%, pushing the euro down to around 1.0555.
In commodity markets, oil prices have declined by 1.5% this afternoon, with Brent crude falling below $71.1, despite ongoing expectations of reduced OPEC supply. Meanwhile, U.S. light crude (WTI) has also seen a decrease of 1.4%, trading at $67.3.