Paris Stock Exchange losses have narrowed to 0.7%, while the EStoxx50 and DAX40 also show declines. U.S. employment figures led to worsening market conditions, with substantial weekly losses anticipated for major indices. Traders are adjusting expectations for potential interest rate cuts by the Federal Reserve. The euro strengthens against the dollar, which has fallen for five consecutive days. Meanwhile, oil prices have increased, with Brent crude exceeding $71 per barrel.
Market Update: Paris Stock Exchange and European Indices
The Paris Stock Exchange has managed to reduce its losses significantly, now down by 0.7% after a more considerable drop of 1.4% between 2:30 PM and 3:45 PM. The impact of the recent US non-farm payroll (NFP) report was minimal, as the market was already experiencing a notable decline before the figures were released.
Across Europe, major indices are also facing downturns, with the EStoxx50 down by 1.2%. The DAX40 has plunged by 1.9%, dropping below the 23,000 mark after reaching a record high of 23,475. If the DAX40 maintains its current standing, it will still reflect a weekly gain of 2%, while the CAC40 is likely to close the first week of March on a steady note.
US Employment Figures and Market Reactions
Curiously, following the reopening of Wall Street, which saw an initial rise of 0.3% to 0.5%, indices began to retreat, with the S&P500 down by 0.4% and the Nasdaq by 0.5%. The US markets are worsening their weekly losses in light of the employment data, with the S&P500 forecasted to drop by 4% and the Nasdaq by 4.3% this week.
The performance gap between the DAX and Nasdaq has surged to approximately 6% this week alone, marking a staggering 21.5% increase since January 1—a level of disparity not witnessed in 50 years. The Department of Labor reported that the US created 151,000 non-farm jobs in January, falling short of the expected 160,000, while the unemployment rate rose to 4.1% from 4% in January, contrary to expectations of stability.
In the wake of this data, traders are now pricing in a greater than 53% likelihood of a 25 basis point rate cut at the upcoming June 18 meeting, up from 47.5% previously. The odds of a rate cut as early as May have decreased to 42.8% from 46.6% earlier in the week.
In the currency markets, the dollar has seen increased losses against the euro as investors react to the employment report, suggesting it could pave the way for another rate cut. Bastien Drut, head of strategy and economic studies at CPR AM, cautioned that a decline in the labor market combined with rising tariffs could complicate the Federal Reserve’s monetary policy decisions.
Jerome Powell, the Federal Reserve Chairman, is set to address the economic outlook for the U.S. at a conference organized by the University of Chicago at 6:30 PM Paris time, which could provide further insights for the market.
Additionally, Eurostat has released the latest growth figures for the eurozone, indicating a seasonally adjusted GDP increase of 0.2% for the eurozone and 0.4% for the EU in the fourth quarter of 2024. For France, the trade balance remained at -5.6 billion euros in January 2025, with exports and imports stable at 50.7 billion euros and 56.3 billion euros, respectively.
In the bond market, the yield on the 10-year German Bund has decreased by 5.5 points to 2.832%, remaining at its highest level since October 2023. Meanwhile, yields on French OATs have dropped by 3.5 points to 3.545%. The ECB has lowered its key rate to 2.50% and described its monetary policy as “less restrictive.” In the U.S., the yield on the 10-year bond has eased by 1.8 points to 4.263%.
Finally, in the foreign exchange market, the dollar has experienced five consecutive days of decline against the euro, falling by 0.75%. The euro has risen above the critical threshold of 1.08 against the dollar, reaching around 1.0890 in the morning and settling at 1.0875 by 5 PM, marking its highest level since last November.
On the energy front, oil prices have rebounded by 2.5%, with Brent crude surpassing $71 per barrel while WTI approaches $68.