A positive opening is anticipated for the Paris Stock Exchange, driven by hopeful diplomatic developments in Ukraine, although caution prevails as investors await U.S. inflation data. The CAC 40 index futures show signs of recovery after recent losses. Concerns about U.S. economic growth and trade tensions persist, particularly with tariff disputes. Meanwhile, the euro strengthens, oil prices rise, and gold remains stable despite market volatility, with predictions suggesting a potential surge in gold prices.
Paris Stock Exchange Outlook: A Positive Start Amid Caution
The Paris Stock Exchange is set to kick off on a positive note this Wednesday morning, buoyed by optimistic diplomatic progress regarding the situation in Ukraine. However, a degree of caution is expected as investors await the latest U.S. inflation data.
As of 8:15 AM, the futures contract for the CAC 40 index, expiring in March, has risen by 60.5 points, reaching 8010 points. This signals a potential recovery following a recent downward trend.
Yesterday, the Paris market concluded its session down 1.3% at 7941 points, marking its third consecutive day in the red.
Inflation Data and Global Trade Concerns
A cautious sentiment is likely to prevail as traders anticipate the release of the U.S. Consumer Price Index (CPI) figures at 2:30 PM. These numbers are expected to indicate a slowdown in the recent disinflation trend.
Given the prevailing worries about U.S. economic growth and the looming threat of stagflation, any figures that surpass expectations could lead to a negative market reaction.
While costs for cars, housing, and wages appear to be stabilizing, economists are concerned about the inflationary impact of several tariff hikes initiated by the previous U.S. administration.
In a report published yesterday, Goldman Sachs analysts predicted a core inflation rate of 2.9% year-on-year in the U.S. by the end of the year, a slight decrease from 3% in February.
Global trade tensions are unlikely to dissipate today, with the European Union implementing tariffs on approximately 26 billion euros worth of U.S. imports in response to what it deems ‘unjustified’ tariffs from Washington.
Additionally, U.S. tariffs on European steel and aluminum stand at 25%, equivalent to about 26 billion euros according to Brussels.
Wall Street experienced significant volatility yesterday, spurred by President Trump’s announcement to double tariffs on aluminum and steel imports from Canada. However, he later reversed this decision after discussions with Ottawa, which threatened to cut power supplies to the U.S.
“It has been six times in seven days that U.S. trade policy towards its northern neighbor has changed,” lamented Michael Brown, a strategist at Pepperstone.
In light of these developments, analysts expect market participants to be cautious in adjusting their stock positions.
Despite the tumultuous session, U.S. stock markets managed to close Tuesday with minimal losses, with declines of 1.1% for the Dow Jones and 0.2% for the Nasdaq, aided by hopeful developments in Ukraine.
A temporary ceasefire agreement endorsed by the U.S. and Ukraine during talks in Saudi Arabia has raised some hopes for a resolution to the conflict, although Russia’s stance remains unclear, leaving peace uncertain.
Meanwhile, the bond market is displaying a counterintuitive trend, as the yield on ten-year Treasuries climbs to nearly 4.29%, despite strong risk aversion on Wall Street.
On the currency front, the euro is experiencing an upward surge, gaining 0.9% to reach 1.0934 dollars, its highest level since November 5.
The oil market is also trending upwards ahead of the afternoon release of U.S. crude inventory data. North Sea Brent has increased by 0.1% to 69.6 dollars, while U.S. light crude (WTI) sees a similar rise to 66.3 dollars.
Gold prices have dipped slightly, down 0.1% to 2,916.5 dollars, as the market continues to consolidate amid heightened volatility, yet remains well above the crucial support level of 2900 dollars. Given the prevailing uncertainty in U.S. markets, some experts predict the yellow metal may soon reach the 3000 dollar per ounce mark.