Paris Stock Exchange is poised for a slight recovery as trading remains muted due to Wall Street’s Thanksgiving closure. The CAC 40 index futures rose 18.5 points after three days of declines. Political uncertainties surrounding the Barnier government’s budget and broader economic challenges continue to weigh on investor sentiment. German inflation data and stable oil prices are influencing market dynamics, while US markets showed minor declines before the holiday.
Paris Stock Exchange Seeks Recovery Amid Thanksgiving Calm
The Paris Stock Exchange is set to make a modest attempt at recovery on Thursday morning, as trading activity is expected to be subdued with Wall Street closed for Thanksgiving.
As of 8:15 AM, the futures contract for the CAC 40 index for December delivery has increased by 18.5 points, reaching 7172 points. This hints at a slight rebound following three consecutive days of decline.
Political Uncertainty and Economic Concerns Weigh on Investors
Yesterday, the Paris market ended the day down by 0.7%, closing at 7143 points, amid ongoing political uncertainty that remains a significant concern for investors. The budget proposed by the Barnier government is still awaiting ratification by the National Assembly and has been sent back to the Senate for potential amendments. There is no assurance that the final version will gain approval from both chambers.
In addition to political issues, economic, fiscal, and geopolitical challenges affecting Europe are causing investors to proceed with caution, hindering any immediate recovery in the stock market. Since reaching its all-time high last May, the CAC 40 index has dropped by 13.5%. Meanwhile, the Euro STOXX 50 has seen a modest gain of 4.7% this year, significantly lagging behind the S&P 500, which has surged over 25% since the start of 2023.
Today’s trading volume is anticipated to be low due to the closure of US markets for the holiday, but European sessions will be influenced by the recent inflation data released from Germany.
In October, inflation in Germany rose from 1.8% in September to 2.4%, largely driven by a notable base effect from energy costs. With prices having dipped sharply by 0.7% month-on-month in November 2023, the upcoming comparison may again be challenging.
On Wall Street, US markets experienced a slight consolidation yesterday after hitting new record highs, despite significant easing in interest rates. At the close, the Dow Jones fell by 0.3% while the Nasdaq dropped by 0.6%.
In the US bond market, which will also be closed on Thursday, the yield on ten-year Treasuries decreased to 4.24% following the release of an inflation indicator that met expectations. The New York Stock Exchange will reopen tomorrow for a half-day session known as ‘Black Friday.’
In the bond market, the yield on ten-year French debt returned to 3.02%, matching that of Greek bonds. Meanwhile, German Bund yields eased to 2.16%, resulting in a financing spread between France and Germany of 86 basis points, a significant increase from the 45 points recorded prior to the dissolution on June 9.
Oil prices remain relatively stable as investors await OPEC+’s response to escalating geopolitical tensions and prevailing economic uncertainties. Brent crude is holding steady at $72.8, while West Texas Intermediate (WTI) crude has seen a slight decrease of 0.1%, now just below $68.7.