The Paris Stock Exchange is looking to recover after a recent decline, although trading may be limited due to Armistice Day. The CAC 40 index saw a slight increase, but overall, European markets lag behind the U.S., with analysts predicting further rate cuts from the ECB amidst economic challenges. Upcoming data releases, including investor sentiment and U.S. inflation figures, may influence market sentiment, while major American companies prepare to report quarterly earnings.
Paris Stock Exchange Seeks Recovery Amid Armistice Day
Following a downturn last week, the Paris Stock Exchange is poised to make a comeback on Monday morning. However, trading activity may remain subdued due to the public holiday honoring the Armistice of November 11, 1918.
As of 8:15 AM, the CAC 40 index’s future contract for November has risen by 32.5 points, reaching 7373 points, suggesting a positive start to the trading day.
Market Performance and Economic Outlook
Last week, the Paris market experienced a decline of nearly 1%, marking its third consecutive week in the negative. This brings its total losses since January 1 to approximately 2.7%. In stark contrast, the Nasdaq has surged by 28% during the same timeframe, creating a significant disparity exceeding 30%.
The Euro STOXX 50 has also faced challenges, recording a second successive week of losses with a 1% drop last week. Currently, it shows a modest 6.2% increase this year, while the S&P 500 boasts a remarkable 25% gain, highlighting a gap not witnessed in 25 years.
The underperformance of European stock markets became more pronounced last week, influenced by the ‘Trump Trade’ phenomenon, which has led to a rally in American stocks and a stronger dollar, fueled by anticipated tax cuts from the upcoming U.S. administration.
On Wall Street, the week concluded positively, with the Dow Jones briefly surpassing the 44,000-point milestone, and the S&P 500 achieving a historic high above 6000 points.
In light of these developments, investors may remain cautious regarding European stocks, perceiving them as more susceptible to economic slowdowns. Analysts at Pictet AM expressed that “American stocks have more to offer,” suggesting that unfavorable conditions in Europe may compel the European Central Bank (ECB) to implement more aggressive rate cuts compared to the Federal Reserve.
With impending cuts in public spending across major economies like France and Germany, combined with disappointing growth across Europe, the ECB is likely to lower rates to below the neutral threshold of 2%, according to predictions from the asset manager.
While today lacks significant economic indicators or corporate earnings reports, due to the closure of U.S. public offices for Veterans Day, the upcoming days promise a wealth of financial disclosures.
In Germany, the ZEW index of investor sentiment is set to reflect the consequences of last week’s political turmoil resulting from the collapse of the tripartite coalition. Meanwhile, U.S. consumer price data anticipated for release tomorrow is expected to reaffirm the return of inflation towards the Fed’s 2% target.
Additionally, retail sales figures scheduled for Friday may be impacted by disruptions linked to hurricanes and pre-election uncertainty, which could potentially dampen household spending.
Several major American companies, including Walt Disney, Cisco, Home Depot, Applied Materials, and Spotify, are set to announce their quarterly results in the upcoming days.