Has the Federal Reserve just sent the "signal" Wall Street was hoping for--a promise of lower rates to halt the decline and encourage a "buy the dips" strategy?
John Williams, head of the influential New York Fed, a self-described "dove" and voting member of the Federal Open Market Committee, has just stated that "the Fed could still cut interest rates 'in the short term' without jeopardizing its inflation target," directly contradicting four of his colleagues who recently cast doubt on a third monetary easing in December.
According to the CME FedWatch tool, expectations have just rebounded from a 35% to a 70% probability of a key rate cut in four weeks.
However, Wall Street is not getting carried away. The initial 0.5% gains on the Nasdaq and S&P 500 quickly evaporated, with indices weighed down by Nvidia, which is dropping another -2.7%. The Nasdaq-100 has even slipped back into negative territory, down -0.1%, accumulating a -3.6% loss for the week--on track for its worst week in seven months (since early April), an unprecedented reversal not seen since last April.
After starting the session with a drop of more than 1.2% (finding a floor around 7,880), the CAC attempted to reclaim the 8,000 mark, but gains failed to hold (-0.2% at present). Trading volumes reflect a lack of buyer conviction, with only EUR1.6 billion exchanged.
The EuroStoxx 50 is down -1% (-3.2% for the week), following Frankfurt, which is off -0.6%.
The CBOE's 'VIX' volatility index, regarded as the market's "fear gauge," which saw 36% intraday volatility on Thursday, remains tense this Friday, up +2% to around 27.
After more than six months of nearly continuous gains, volatility appears to be back in force on the markets and could well become the norm through the end of the year.
This renewed nervousness above all highlights investors' lack of confidence in the continuation of the Fed's rate-cutting cycle, which until now had seemed a foregone conclusion.
Yesterday's U.S. jobs report, which far exceeded expectations, has led investors to reconsider the likelihood of another rate cut next month.
The morning in Europe was marked by the first results of S&P Global's monthly PMI surveys of European private sector purchasing managers.
The flash HCOB composite PMI for overall activity in the eurozone came in at 52.4 in November, down slightly from October's 52.5, but still signaling robust private sector growth.
In France, the flash HCOB composite PMI for overall activity edged up from 47.7 in October to 49.9 this month, its highest level since August 2024, indicating near-stagnation in private sector activity in November.
The synthetic business climate indicator for France, calculated by Insee from business leaders' responses, gained one point to reach 98 in November, drawing closer to its long-term average (100).
With the return of uncertainty surrounding Fed policy, which is likely to keep investors on edge, it seems unlikely that equity markets will regain the calm that prevailed since the start of the year.
With earnings season over and the return of U.S. economic indicators after six weeks of 'shutdown', investors will now turn their attention to the American economy and the Federal Reserve, watching for any sign of a shift in economic conditions or monetary policy.
This promises further turbulence for stocks, and investors who had grown accustomed to snapping up bargains during rare bouts of market weakness--following the "buy the dips" mantra--may find themselves disappointed this time.
On the bond market, the 10-year OAT fell by -2 basis points to 3.467%, while the equivalent Bund dropped -3 basis points to 2.689%, for a spread of 77 basis points.
In London, Brent crude slipped 1.65% to $62.2, while WTI fell by a similar margin to around $58.
The euro continued to slide against the dollar (-0.2%), trading at $1.1500.
In French corporate news, Veolia announced an agreement with Enviri to acquire Clean Earth, described as "its largest and most transformative acquisition since the merger with Suez, both for accelerating its growth in the United States and in the American hazardous waste sector."
After a week-long suspension, Ubisoft returned to the Paris stock exchange at 10 a.m. today, coinciding with the release of its half-year results. The group posted an adjusted net loss (group share) of -EUR37 million for the first half of its 2025-26 fiscal year, compared to a loss of -EUR208.1 million a year earlier. Diluted non-IFRS earnings per share came in at -EUR0.28, versus -EUR1.64 last year. The stock gained nearly 11% by late morning.
Canal+ announced last night that it has secured the renewal of 100% of its exclusive rights to the Champions League, Europe's most prestigious football competition, which it will continue to broadcast in France through 2031--to the "great relief" of analysts covering the stock.
