The Paris Stock Exchange is expected to begin the week cautiously, influenced by upcoming US employment data. The CAC 40 index futures indicate a decline, following a drop below the 7300-point level last week. Analysts predict a challenging year ahead, citing stagnant growth and political uncertainties. Key economic indicators, including PMI and inflation data, will be released this week, culminating in crucial employment figures that could impact market sentiment and the Federal Reserve’s monetary policy.
Paris Stock Exchange Outlook
The Paris Stock Exchange is anticipated to commence the week with caution this Monday, as early trading signals a focus on the upcoming release of monthly employment data from the United States.
As of 8:15 AM, the January future contract for the CAC 40 index shows a decline of 110 points, settling at 7292.5 points, which suggests a challenging start to the week.
Following a modest increase of 0.2% on Thursday during the year’s first trading session, the Paris market took a downturn on Friday, plummeting over 1.5% to 7282 points, dropping below the critical 7300-point mark.
Analysts’ Perspectives and Key Economic Indicators
Analysts foresee a tough fiscal year for the CAC 40 in 2025, pointing to stagnant economic growth, ongoing political uncertainties, and a lack of alignment with Wall Street trends.
Christopher Dembik, an investment strategy advisor at Pictet AM, cautions that the Paris index will not benefit soon from any potential economic recovery in China, which adds to the prevailing concerns. He also notes that the technical indicators suggest a continuation of the downward trend that has been in place since May.
With the holiday season concluded, attention will pivot to the PMI indices for the services sector expected to be released today, along with inflation figures for the eurozone due tomorrow. Analysts at Capital Economics predict these numbers will indicate a gradual easing of core inflation pressures amidst weak economic growth.
This week will also feature the release of the US Federal Reserve’s monetary policy meeting minutes on Wednesday, which may shed light on the recent shift in the Fed’s policy approach and the anticipated pace of rate cuts for the year ahead.
The week culminates on Friday with the crucial release of December’s employment figures, a key metric for market sentiment, especially as the Fed closely monitors this statistic for its policy decisions. Economists forecast approximately 155,000 new non-farm jobs, down from 227,000 in November, with the unemployment rate remaining stable at 4.2%.
A robust employment report could raise concerns about reduced monetary easing from the Fed, potentially causing a decline in Wall Street, particularly in light of the significant 23% rise in the S&P 500 in 2024, which may necessitate a consolidation phase.
In recent trading, Wall Street rebounded on Friday after five consecutive days of losses, as investors showed renewed interest in technology stocks such as Tesla (+8.2%), Palantir (+6.1%), and Nvidia (+4.5%), resulting in the S&P 500 closing up over 1.2%.
Lastly, it is worth noting that US stock markets will be closed tomorrow in observance of a national day of mourning for former President Jimmy Carter, who passed away at the age of 100.
On the bond market front, the OAT/Bund spread has widened again to 86 basis points, highlighting increasing concerns about France’s ability to address its deficit challenges by 2025. Meanwhile, the yield on ten-year Treasuries remains relatively stable at around 4.59%.
In the commodities market, oil prices are stabilizing after recent gains, with Brent crude down approximately 0.2% at $76.3, while US WTI is down 0.3%, trading below $73.8.