Paris Stock Exchange remains stable with a slight decline, while US markets show mixed results. Wall Street shifts focus from rising interest rates as upcoming earnings reports from major banks could influence investor sentiment. Anticipated earnings growth for S&P 500 companies is notable, though concentrated among few firms. Concerns over trade uncertainties and potential market corrections are prevalent. Gold prices decline, while the Dollar strengthens. Oil prices rise amid new sanctions on Russia, and French firms bioMérieux and Sanofi report significant developments.
Paris Stock Exchange Update
The Paris Stock Exchange is currently holding steady, showing a slight decline of just 0.1%, hovering around 7,420 points, a significant recovery from a morning dip of nearly -1% to approximately 7,354. Meanwhile, US markets have reopened with limited losses; the S&P 500 is down by -0.5%, the Nasdaq by -1.1%, while the Dow Jones has seen a positive shift, gaining +0.5% to reach about 42,150 points.
Upcoming Earnings Season and Economic Outlook
Wall Street appears to be shifting its focus away from rising interest rates, with the US 10-year Treasury Bonds peaking at approximately 4.785% and the 30-year bonds fluctuating between 4.9700% and 4.978%. This situation poses challenges for the real estate sector. Additionally, the volatility index (VIX) has surged by +8% to around 21, indicating increased market nervousness, even as the S&P 500 remains relatively stable.
As we move into a crucial week for the market, several major companies are set to release their quarterly earnings, which will play a pivotal role in shaping investor sentiment. Key players like Citi, Goldman Sachs, JPMorgan, and Wells Fargo are scheduled to report on Wednesday, followed by Bank of America and Morgan Stanley the next day. Insights from these financial giants will be critical for assessing the current economic climate, consumer behavior, and future outlook in the United States.
According to FactSet, the anticipated earnings growth for companies within the S&P 500 is projected at an impressive 11.7% year-on-year for the fourth quarter, marking the strongest increase since late 2021. However, this figure conceals significant disparities, with 70% of profits concentrated among just ten firms, while the majority of the ‘S&P 480’ will likely report declining results over the year.
As seen last Friday with robust employment figures, strong statistics may no longer suffice to drive market growth, given their implications for monetary policy. The ongoing earnings reports will determine whether the New York Stock Exchange can regain upward momentum, especially as the S&P 500 currently trades at 21.5 times its earnings, surpassing its ten-year historical average of 18.2.
Additionally, the earnings season unfolds amid heightened trade uncertainties, particularly with the impending inauguration of Donald Trump as the 47th president of the United States. Trump has previously indicated intentions to impose tariffs on Chinese goods at 60% and 10%-20% on imports from other nations, which could negatively impact several sectors, including retail, automotive, technology, and manufacturing.
Given these uncertainties and less attractive valuations, investors are questioning whether it’s time to realize profits on US stocks, fearing a potential market correction in the coming months. Goldman Sachs strategists recently estimated a 30% chance of a global stock market decline of at least 10% within three months, and a 20% drop in the next year.
In this context, gold has dipped by -0.9%, trading around $2,665, following its peak levels from two months ago. Conversely, the Dollar has gained strength, reaching a new annual high against the Euro, which has dropped to about 1.0180, currently down -0.4% to around 1.0200. The Dollar Index has increased by 0.5%, crossing back above 110 to settle at 110.20.
The rise in interest rates (+2.7 points on OAT to 3.45%, +1.5 points on Bunds to 2.5830%) is beginning to heavily impact cryptocurrencies, with Bitcoin down -4% (below $91,000), Solana and Ethereum down -7% (around $3,020), and Cardano falling by -10%. Over the past week, Solana has declined by -20%, while Ethereum is down -18%.
Oil prices continue to trend upward as the Biden administration has announced new sanctions targeting the Russian energy sector. Brent crude is up nearly 1% to around $81 per barrel, while WTI has increased by 1.1% to approximately $76.70.
In news related to French companies, bioMérieux has finalized an agreement to acquire SpinChip Diagnostics, a Norwegian firm where it has held a 20% minority stake since March 2024. Additionally, Sanofi has received approval from the Chinese NMPA for its Sarclisa treatment, in combination with pomalidomide and dexamethasone, for adults with relapsed or refractory multiple myeloma who have undergone at least one previous treatment.