The Paris stock exchange dipped by around 0.4% this morning, hovering near 8,090 points, weighed down in particular by Airbus, which tumbled 3.5% after it emerged that some 6,000 A320 aircraft are affected by a software problem.
A recent incident involving an aircraft revealed that solar radiation could impact the flight control systems of a significant number of A320 family jets currently in service.
"We are working with our airline customers to support the modification of fewer than 100 remaining aircraft to ensure their return to service," the aerospace group stated this morning.
The Paris index is also contending with declines from Bureau Veritas (-2.3% following a broker downgrade) and defense stocks such as Thales and Safran, down 2.3% and 1.6% respectively.
After a turbulent November, which did not live up to its reputation as a bullish period for global markets, investors are now questioning whether the strong rebound seen over the past ten days can be sustained.
Concerns over the direction of Federal Reserve monetary policy and the high valuations reached by major U.S. tech stocks triggered a bout of consolidation in mid-November across global equity markets -- a pullback that was ultimately short-lived.
Conditions have improved markedly in recent days, with the Dow Jones gaining more than 3% during the Thanksgiving-shortened week and the Nasdaq posting a near 5% weekly advance.
In Paris, the CAC 40 now sits just over 2% below its all-time high of 8,314.2 points, set about two weeks ago.
"This seems to confirm our view that the early November consolidation was mainly a healthy pause after strong performances in September and October, rather than a trend reversal, especially as data still indicate that the global economy is resilient," commented Xavier Chapard, strategist at LBPAM.
Optimism is being fueled by hopes of another Fed rate cut in December -- seen as likely by 87% of traders according to the FedWatch tool -- and by progress toward a peace deal in Ukraine, as reported by Washington, both of which could help extend the current rally.
Another encouraging sign is that equity market gains now appear less dependent on the artificial intelligence theme, as evidenced by the recent weakness in Nvidia, which did not prevent Wall Street from rebounding thanks to a resurgence in healthcare stocks that had underperformed year-to-date.
The broader distribution of market gains is seen as good news: it means a wider range of opportunities is now available to investors, allowing for greater portfolio diversification beyond the performance of AI specialists.
While valuations have become more attractive and market sentiment remains robust, the main driver of the ongoing rally is clearly the prospect of another U.S. rate cut next week.
For markets to remain upbeat, the Fed will need to deliver rate cuts and inflation must be brought under control without significant economic deterioration, cautions Scott Chronert, Citi's star strategist. "In short, the soft landing scenario must remain intact," he emphasized.
Additionally, a "Santa Claus rally" cannot be ruled out: December is traditionally a favorable month for the S&P 500, which typically gains between 1.4% and 1.5% on average during the period, according to Stock Trader's Almanac data.
Beyond this potential seasonal effect, investors who felt they missed out on bargains during the recent market dip may be tempted to engage in bargain hunting.
On the data front, the HCOB PMI for French manufacturing, compiled by S&P Global, slipped from 48.8 in October to 47.8 in November, indicating a slight acceleration in the contraction of the eurozone's second-largest manufacturing sector last month.
In Europe, the HCOB PMI for eurozone manufacturing fell from 50 in October to 49.6 in November, signaling a return to unfavorable conditions in the sector as the index dropped below the key 50 threshold.
The decline in the index is mainly attributed to a drop in new orders, pointing to renewed headwinds for demand. However, production growth was maintained for a ninth consecutive month.
Particular attention will be paid this afternoon to the U.S. ISM manufacturing index, ahead of Wednesday's release of its services component, both of which are expected to confirm the strength of the American economy.
In London, Brent crude is up 0.6% at USD 63.6. The euro is gaining 0.2% against the greenback, trading around USD 1.162.
Among French corporates, Bureau Veritas shares were among the biggest losers on the CAC 40 Monday morning after RBC analysts downgraded their recommendation to "underperform" from "sector perform," with a price target lowered from EUR 28.5 to EUR 26.5.
TotalEnergies announced that its subsidiary, TotalEnergies EP Nigeria, has signed an agreement to sell a 40% stake in exploration permits PPL 2000 and PPL 2001, off the coast of Nigeria, to Star Deep Water Petroleum Limited, a Chevron subsidiary.
AXA reported Friday evening that it had finalized the acquisition of a 51% majority stake in Prima, an Italian direct insurance specialist. The transaction, announced on August 1, was valued at 500 million euros (EUR 0.5 billion).
LVMH stated Friday evening that 1,899,397 shares had been acquired under the mandate granted to an investment service provider (ISP) on February 17, with the shares to be cancelled as previously announced.
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