After a day of choppy trading, the Paris stock exchange closed the session at 7,959 points, down 0.29%, marking its lowest level of the day. The decline was notably driven by the defense sector, with Safran dropping 2.4% and Thales down 1.5%, as tentative signs of a peace plan on the Ukraine issue begin to emerge under the auspices of the United States. Negotiators from Kyiv have reported "progress" compared to the initial 28-point Trump plan. Danone and Publicis also saw significant declines, falling 1.7% and 1.6% respectively.
Across the Atlantic, the Nasdaq surged by 2.3%, propelled by a red-hot semiconductor sector, while the S&P 500 gained 1.4%. In Frankfurt, the DAX outperformed with a rise of over 0.7%, buoyed by Bayer's 10% jump. However, the macroeconomic backdrop remains subdued, as illustrated by Germany's IFO business climate index, which slipped slightly to 88.1 in November from 88.4 in October, defying expectations of a modest rise to 88.5.
Like other European markets, Paris was hit last week by a sharp spike in volatility, reflecting a renewed risk aversion primarily triggered by Wall Street's turbulence. Strong results from Nvidia were not enough to dispel concerns over the potential overvaluation of major U.S. tech stocks.
Somewhat unexpectedly, the November market expiry--which ended last Friday and was expected to kick off the traditional year-end rally--brought a sudden halt to a six-month bullish streak, with indices abruptly falling back to their early September levels.
However, December is off to a promising start on Wall Street, with the S&P 500 up 1.4% (regaining its former support at 6,700 points) and the VIX volatility index easing 9.5% to 21.30. This scenario was somewhat predictable, just 48 hours before Thanksgiving and 72 hours before Black Friday, with the first day being a holiday and the second a half-session with 80% of market participants absent.
Next comes the beginning of year-end "window dressing," and some are hopeful for the traditional "Santa Claus rally," with Monday potentially marking the start in "buy the dips" mode. Since the market reversal, the S&P 500's annual gain has shrunk to around 12%, down from nearly 19% at the end of October.
For some, the recent market pullback reflects an overreaction by investors who have yet to grasp the transformative impact artificial intelligence will have on the economy in the coming years. Others believe investors are simply "exhausted" after a nearly uninterrupted rally since "Liberation Day" and are looking to take profits as the fiscal year draws to a close.
Market dynamics could shift as soon as tomorrow with the release of September's retail sales and producer price data, followed the next day by third-quarter growth figures and, most importantly, the highly anticipated PCE index--the Federal Reserve's preferred inflation measure.
"It's true that a Fed rate cut in December would strengthen our growth and cyclical positioning, which would justify a year-end rally," Citi strategists noted last Friday.
On the bond market, the 10-year French OAT yield eased by 2 basis points to 3.454%, while the equivalent Bund remained unchanged at 2.698%. In the U.S., the 2035 T-Bond fell by 1 basis point to 4.054%, the 30-year dropped 1.6 basis points to 4.689%, and the 2-year yield rose by 1 point to 3.524%.
In London, Brent crude gained 0.4% to around $62.8 per barrel. The euro was steady against the dollar at around $1.15, while gold rebounded 0.8% to $4,095 an ounce.
In French corporate news, Thales announced a strategic partnership with CNN MCO, a part of Equans France, and CS Group, a Sopra Steria subsidiary, to modernize three French Navy amphibious helicopter carriers.
Airbus reported it has been awarded a contract by Oman's national satellite operator, Space Communication Technologies (SCT), for OmanSat-1, a new-generation OneSat telecommunications satellite and its associated system.
Casino unveiled a plan to adapt and strengthen its financial structure, aiming to complete these efforts by the end of the second quarter of 2026, as well as financial targets for its "Renouveau 2030" plan.
Alstom announced the signing of a memorandum of understanding with Angola's Ministry of Transport to evaluate and plan the Blue Line project, a future 50-kilometer coastal rail line between Cacuaco and Benfica.
Finally, Euronext announced the launch of the "European Aerospace and Defence Growth Hub," bringing together 15 companies from France, Hungary, Italy, and the Netherlands to support the sector's supply chain.
