Paris Stock Exchange fell 0.79% to 7431 points after a robust US employment report showed 256,000 jobs added in December, surpassing expectations. The US unemployment rate dropped to 4.1%. Major US indices also declined, and bond yields rose. Consumer sentiment weakened as inflation concerns grew. In France, household consumption increased, and manufacturing saw slight growth. Goldman Sachs warned of a potential market correction in early 2025. Unibail-Rodamco-Westfield sold a stake in a shopping center while Engie expanded its wind farm project in Egypt.
Paris Stock Exchange Experiences Decline Following Strong US Employment Report
The Paris Stock Exchange ended the day with a decrease of 0.79%, closing at 7431 points. This sudden downturn occurred around 2:30 PM after the release of an unexpectedly robust US Non-Farm Payroll (NFP) report, revealing an additional 30,000 jobs created compared to the consensus estimate of 256,000. Moreover, the unemployment rate unexpectedly dropped to 4.1%.
US Job Growth Surpasses Expectations
According to the Department of Labor, the US economy added 256,000 non-farm jobs in December, up from 227,000 in November. This figure significantly exceeded economists’ forecasts, which were typically around 170,000, aligning more closely with previous ADP data. The unemployment rate fell by 0.1 percentage points to 4.1%, while analysts had anticipated it would remain stable at 4.2%. The participation rate in the labor force held steady at 62.5%, and average hourly earnings saw a year-on-year increase of 3.9%.
Revisions to non-farm job creation for the previous two months showed an upward adjustment from 36,000 to 43,000 for October and a decrease from 227,000 to 212,000 for November, resulting in a net revision of -8,000 jobs for those months.
On Wall Street, major US indices suffered losses following a holiday, with the Dow Jones down by 1.5%, the S&P 500 by 1.6%, and the Nasdaq falling by 2%. In the bond market, yields on T-Bonds surged, with the yield climbing by 7 basis points to 4.751%. The yield on the 30-year bond also increased by 3.5 basis points, nearing the psychological threshold of 5.000%.
European bond markets felt the impact of rising US T-Bonds, as Bund yields increased by 3 basis points to 2.5561%, while French OATs rose by 2.5 basis points to 3.412%, maintaining a spread of 85 points without significant changes.
Consumer sentiment in the US, however, took a hit as reported by the University of Michigan, with the confidence index dropping to 73.2 from last month’s 74, falling short of the expected 73.9. Although consumer evaluations of their current situation improved, the outlook component declined, reflecting growing concerns about inflation expectations which have risen to 3.3% for the next year, compared to 2.8% previously.
The NFP report’s strong performance bolstered the US Dollar, which reached a new annual high against the Euro, which fell by 0.6% to a multi-year low of $1.022. Additionally, statistics from France indicated a 0.3% month-on-month rebound in household consumption expenditures for goods in November, following a 0.3% decline in October.
In the manufacturing sector, production in France saw a slight month-on-month increase of 0.2%, contrasting with a 0.1% decrease in October. Recent geopolitical tensions, including Donald Trump’s aggressive trade rhetoric and rising British bond yields, have further complicated the market landscape.
Goldman Sachs has warned that after a notably strong 2024, particularly for US equities, the likelihood of a market correction has escalated at the start of 2025, with a nearly 30% chance of a market drop of at least 10% over the next three months.
Over the week, the CAC index gained 2%. Meanwhile, the oil market is poised for its third consecutive week of gains, with Brent crude rising by 2% to $78.8 per barrel, buoyed by increased demand despite concerns over potential economic slowdowns and interest rate fluctuations.
In corporate news, Unibail-Rodamco-Westfield announced the sale of a 25% stake in its Centrum Cerny Most shopping center in Prague to Upvest and RSJ Investments. Engie revealed the expansion of its major wind farm project in Ras Ghareb, Egypt, increasing its capacity from 500 MW to 650 MW.