Paris Stock Exchange is facing a 0.4% decline, driven by significant losses in the luxury sector, with Kering, LVMH, and L’Oréal all down. Meanwhile, other European markets show strength, while Wall Street remains cautious ahead of the Fed’s announcement. Investors are focused on monetary policy and earnings reports from major tech firms. Additionally, LVMH and KLM report declines and job cuts, respectively, amidst ongoing trade tensions and a weakening Euro.
Paris Stock Exchange Faces Decline Amid Luxury Sector Struggles
The Paris Stock Exchange is experiencing a downturn this Wednesday, with the CAC40 index dipping by 0.4%, currently at 7,865. This decline is largely attributed to the luxury sector, which has seen significant losses: Kering is down 5.8%, LVMH has dropped 5.6%, and L’Oréal is down by 2.7%.
European Markets Show Resilience While Wall Street Remains Cautious
In contrast to Paris, other European stock markets are performing well, with the E-Stoxx50 nearing an all-time closing record, up 0.8% at 5,240. The DAX40 has increased by 1% to 21,660, while Amsterdam leads with a 1.1% rise to 910, buoyed by ASML’s impressive 5.5% gain.
Meanwhile, Wall Street’s reopening displayed some uncertainty, as market scores have remained stable since 4 PM. The Dow Jones has edged up by 0.1%, but the S&P 500 has fallen by 0.3%, and the Nasdaq is down by 0.6%, reflecting a cautious sentiment ahead of the Fed’s announcement later tonight.
Following a week marked by the DeepSeek earthquake, central banks are returning to the spotlight. The Federal Reserve is anticipated to pause its easing policy and maintain current interest rates, with more than 97% of market participants expecting this outcome, according to the CME Group’s FedWatch barometer.
Michael Brown, a strategist at Pepperstone, notes that the central question for FOMC members is whether this ‘pause’ will lead to a more extended period of inaction due to the labor market’s resilience and ongoing disinflation challenges.
With the European Central Bank (ECB) expected to announce another rate cut tomorrow amid sluggish growth in the eurozone, investors are eager for insights from Christine Lagarde regarding the future trajectory of interest rates and their potential benefits for the economy.
Furthermore, major tech companies such as Microsoft, Meta Platforms, Tesla, and IBM are set to release their earnings this evening, with Apple and Intel following suit tomorrow. According to Michael Brown, positive results from these ‘Magnificent Seven’ companies could reassure investors and spur a rebound in risk assets.
In corporate news, Dutch semiconductor equipment giant ASML reported fourth-quarter results that surpassed expectations, even though they represented a 3.4% decline from the previous quarter.
However, the earnings season and monetary policy updates may struggle to distract investors from trade tensions. Recent comments from U.S. Treasury Secretary Scott Bessent about implementing ‘universal’ tariffs of 2.5% have been met with calls for stronger measures from Donald Trump.
The Euro continues to weaken, down 0.3% against the dollar at 1.0380, while bond markets are under pressure in anticipation of central bank meetings. The yield on ten-year Treasuries is easing to around 4.51%, while the German Bund stands at 2.543%, down 1.7 basis points.
In the energy sector, oil prices are falling ahead of the U.S. weekly oil inventory report. Brent crude is down 1% to $76.9 a barrel.
In specific corporate news from France, LVMH Moët Hennessy Louis Vuitton reported its 2024 sales at €84.7 billion, reflecting a 1% organic growth but a 2% reported decline. The Group’s net income for 2024 is €12.6 billion, down from €15.17 billion in 2023.
Additionally, KLM, part of the Air France-KLM group, announced plans to cut 250 jobs as part of its cost-saving initiative revealed last October. Alstom also announced a strategic partnership between its subsidiary HELION Hydrogen Power and M Reformer, focusing on high-power fuel cells.