Following Donald Trump’s election victory, the Paris Stock Exchange has seen a significant rise, particularly in the luxury and defense sectors. Luxury brands like LVMH and Hermès experienced notable gains in anticipation of increased consumer spending and favorable tax policies. Defense companies, including Dassault Aviation and Thales, also benefited from expectations of boosted military budgets. Additionally, firms like Publicis and Vallourec capitalized on potential tax reforms and energy policies, further enhancing market optimism.
Paris Stock Exchange Sees Surge Following Trump’s Victory
(BFM Bourse) – The Paris Stock Exchange is experiencing a notable uptick in several stocks in the wake of the Republican candidate’s victory. The luxury sector is particularly benefiting from projections of a more favorable consumption climate, alongside expectations for increased military budgets in Europe.
The official announcement of Donald Trump’s win in the American presidential election was confirmed this morning, Wednesday, November 6, with significant victories in key states, including Pennsylvania. The market had anticipated this outcome hours in advance, with the CAC 40 climbing by 1.6% around 11:25 AM, as Trump’s policies are generally seen as advantageous for stock market performance.
Luxury Sector Thrives in Anticipation of Economic Growth
The luxury sector, known for its cyclicality, is capitalizing on the anticipated boost in consumer spending. Stocks like LVMH, Hermès, and Kering saw increases of 1.8%, 2.3%, and 2.6% respectively. Additionally, Essilorluxottica, often associated with luxury, experienced a 3% rise.
Analyst Luca Solca from Bernstein explains, “Trump’s victory signals a potential uplift for cyclical sectors, with the American economy expected to strengthen under his leadership. The luxury sector is poised to benefit from this trend.” Another financial analyst added, “The market outlook is optimistic. The depreciation of the euro against the dollar, down by 1.5% today, favors export-driven companies like luxury brands, alongside Trump’s tax policies and positive consumer spending forecasts.”
While luxury companies may face challenges from potential tariff hikes proposed by Trump, it’s noted that these brands have the ability to pass on cost increases. Moreover, American consumers might choose to shop for luxury goods in Europe should tariffs be implemented, creating a possible shift in purchasing behavior.
Defense Sector Positioned for Increased Budgets
Aerospace and defense companies are also on the rise, with Dassault Aviation and Thales gaining 1.6% and 3% respectively. Investors have been keenly awaiting the election results to bolster their positions in defense stocks. Trump’s victory is likely to lead to an adjustment in U.S. global security funding, which could positively influence European defense budgets, according to Yan Derocles from Oddo BHF.
Companies like Safran and Airbus reported gains of around 2%. Derocles noted, “For aerospace firms, particularly in civil aviation, there are no significant worries. Safran is insulated from potential tariff increases, and Airbus has substantial operations in the U.S., minimizing their exposure.”
Publicis and Other Companies Benefiting from Tax Reform
Publicis, which has seen a 4% rise, is highlighted as a key player in the European market due to expected corporate tax reductions from Trump’s administration. With advertising spending closely linked to consumer behavior, the company’s fortunes are likely to align with improved economic conditions.
Sodexo (+2.3%), heavily reliant on the U.S. market, is also set to gain from proposed tax reforms, potentially boosting its earnings per share by 5%. Stellantis, up by 3.9%, stands to benefit similarly, particularly from eased regulations on electric vehicles, alongside positive market sentiment.
The energy efficiency technology firm Schneider Electric saw a 2.6% increase. Analysts believe that while there are mixed implications from Trump’s plans, the company will likely thrive in a favorable tax environment, as North America accounts for about 30% of its revenue. The anticipated focus on infrastructure projects will further enhance its growth trajectory.
Vallourec’s Gains from Energy Policy
Vallourec emerged as one of the strongest performers in the SBF 120, surging by 5% due to Trump’s energy policy. His commitment to reducing fuel prices and making the U.S. a leading energy producer is expected to result in increased oil drilling activities.
The anticipated acceleration in production is beneficial for companies specializing in hydrocarbons and drilling equipment, particularly Vallourec, which operates entirely within the U.S. and is not subject to import tariffs on its pipes, unlike some competitors. This positions Vallourec favorably in the current market environment.