Tranquility is expected on the Paris Stock Exchange as trading enters a shortened week due to Christmas, with the CAC40 index stable at around 7272 points. Political uncertainty has led to a 3.5% decline in the index for the year, prompting analysts to forecast a phase of position consolidation. Positive trends, such as strong support levels and favorable global conditions, may provide future growth opportunities, despite subdued trading ahead of the holiday season.
Calm Anticipated on the Paris Stock Exchange
The Paris Stock Exchange is set for a tranquil trading day on Monday as the market enters a shortened week due to the Christmas festivities. The CAC40 index remains steady at approximately 7272 points.
Typically, stock markets experience a surge during the final trading sessions of the year; however, this year, investor expectations seem muted. Currently, the CAC 40 is down 3.5% for the year, placing it among the laggards in Europe for 2024.
Political Uncertainty and Market Outlook
This decline can be attributed to ongoing political uncertainty, which has caused investors to shy away from French equities over the past six months. Given that the holiday season is usually characterized by lower activity, it is unlikely that the Paris market will stage a significant recovery before the year concludes.
Last week saw the CAC 40 drop by 1.8%, breaking through key thresholds at 7400 and 7300 points. Analysts are now predicting a period of position consolidation ahead of any potential market rebound.
In a recent analysis, Saxo Bank identified some positive trends for the Paris index. They noted that the CAC 40 has held on to critical support at 7100 points and may benefit from favorable global conditions. The substantial stimulus measures announced by China, alongside a shift toward a more accommodating monetary policy, could provide a much-needed boost.
Additionally, the depreciation of the euro could enhance European exports, helping to mitigate the effects of tariffs imposed by the Trump administration. Saxo Bank also pointed out that stock valuations in Europe are currently more appealing than those in the United States, where valuations have surged to new heights.
With expectations for an aggressive rate cut from the European Central Bank throughout 2025, there may be crucial catalysts to invigorate the economy amid a backdrop of gradually declining inflation. Despite the ongoing political risks influencing current valuations, Saxo believes that improved earnings dynamics and a clearer political landscape could unlock significant growth potential.
As traders shift focus to 2025, they will be monitoring a few key American economic indicators today, including the consumer confidence index, durable goods orders, and new home sales. However, with the Paris Stock Exchange closing early at 1:00 PM tomorrow and remaining closed until Friday, trading activity is expected to be subdued due to the holiday season.
In the bond market, the 10-year U.S. yield is edging lower towards 4.52%, influenced by comments from Austan Goolsbee, president of the Federal Reserve Bank of Chicago, who suggested that ‘neutral rates’ are significantly lower than current levels. This has sparked renewed speculation about potential rate cuts in the upcoming year, contributing to a 1.2% gain for the Dow Jones and a rise of over 1% for the Nasdaq on Friday.
In the foreign exchange market, which is quieter as the year-end holidays approach, the euro remains stable against the dollar at around 1.0440. Following last week’s declines, both major oil benchmarks are showing slight increases, with North Sea Brent up 0.4% to $73.2 per barrel and U.S. light crude (WTI) rising by 0.5% to nearly $69.8.