Paris Stock Exchange has experienced minor losses, currently down 1.50% at 7,880 points, amid mounting pressure from new tariffs proposed by Donald Trump, particularly affecting the automotive sector. European markets are reacting to potential trade wars, with significant declines in major automotive stocks. Global reactions include counter-tariffs from Canada and Mexico, increasing investor caution and a shift towards safer assets like gold. Meanwhile, corporate movements include L’Oréal’s share sale and Stellantis’s operational changes.
Paris Stock Exchange Experiences Minor Losses
The Paris Stock Exchange has managed to slightly lessen its losses, currently standing at -1.50% with the index at 7,880 points, as it strives to maintain a position above the 7,800 mark. This marks the second consecutive Monday where stock indices have experienced a decline of over 1.5%. Last week, the shocking news from Deepseek contributed to the market’s volatility. All European indices are facing significant pressures due to the implementation of tariffs proposed by Donald Trump, leading to a negative impact on the automotive sector.
Germany’s Frankfurt index has been notably affected, with Daimler’s stock dropping by 8% and Volkswagen falling by 7%. Meanwhile, Paris is feeling the strain from Stellantis, which saw a decrease of 6%, alongside Valeo’s 8% drop and Forvia’s staggering 11% decline. The markets are adjusting to the new tariffs imposed on Canada, Mexico, and China, reviving fears of a potential trade war. Trump has also suggested that Europe might be next in line for similar measures.
Global Reactions and Market Instability
In retaliation, Canadian Prime Minister Justin Trudeau has imposed a 25% counter-tariff on various U.S. imports, including alcohol and clothing. Similarly, Mexican President Claudia Sheinbaum is preparing to introduce her own countermeasures. On the other hand, China has expressed strong opposition to the U.S. tariffs and is committed to safeguarding its economic interests through counteractions.
Investor sentiment is growing increasingly wary that the escalating tariffs could jeopardize the robust global economic growth seen recently. The potential for rising inflation is also a concern, prompting a shift towards safer investment options. Today, gold has shown a slight increase of 0.5%, reaching $2,851, while cryptocurrencies are facing a drastic downturn. Bitcoin has dropped 6%, with Ethereum suffering a staggering 25% decline, alongside significant losses in other cryptocurrencies.
Reflecting the heightened market anxiety, Japan’s Nikkei index fell by over 2.7% today, accumulating a total decline of 3.6% since the start of the year. The ongoing trade tensions could further complicate the U.S. monetary policy landscape, especially with the uncertainty surrounding the Trump administration’s impending decisions. Fed Chairman Jerome Powell has chosen to refrain from discussing potential rate cuts amidst this instability.
On Wall Street, futures for major indices indicate a gloomy opening, with losses projected between 1.5% and 2.5%. Moreover, political uncertainties in France are also casting a shadow over the markets, as Prime Minister François Bayrou plans to invoke Article 49.3 to push through a budget proposal, which may lead to a censure motion from opposition parties.
The renewed focus on trade issues has led to a surge in government bond purchases, pushing the yield on 10-year U.S. Treasuries to a notable 4.53%. Meanwhile, the U.S. dollar has strengthened by 1.1% against the euro, which is drifting back towards its multi-year lows around $1.025.
In the oil market, North Sea Brent has seen a modest rebound of 0.3%, approaching $77. On the economic statistics front, the HCOB PMI index for the eurozone’s manufacturing sector has improved, rising from 45.1 in December to 46.6 in January, reflecting the least severe downturn since May 2024.
In France, the HCOB PMI index for manufacturing has also increased from 41.9 in December to 45 in January, marking its highest level since last June, indicating a notable easing in the sector’s contraction.
In corporate news, L’Oréal has announced a deal to sell approximately 29.6 million shares of Sanofi at a price of 101.5 euros each, totaling around three billion euros as part of its share buyback initiative. Stellantis has revealed plans to streamline its operations ahead of appointing a new CEO in the coming months.
Additionally, EssilorLuxottica has received FDA approval for its Nuance Audio Glasses for over-the-counter sales in the U.S., as well as CE marking and ISO certification to launch the product in Europe.
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