The Paris stock exchange is down between -0.3% and -0.5% since midday, with the CAC40 hovering around a pivot of 8,090 points, notably weighed down by Airbus, which tumbled 5.5%. Around 6,000 A320 aircraft are affected by a software issue that makes them vulnerable to high-intensity solar storms.
A recent incident involving an aircraft experiencing a command anomaly in mid-flight revealed that solar radiation could impact the flight control systems of a significant number of A320 family aircraft 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 manufacturer stated this morning.
The Paris index is also suffering from declines in Bureau Veritas (-2.6% after a broker downgrade) and defense stocks such as Thales and Safran (both down 2%), while Rheinmetall is plunging in Frankfurt.
After a turbulent November--which failed to live up to its reputation as a bullish period for global markets--investors are now wondering whether the robust rebound seen over the past ten days can be sustained. US indices (S&P and Dow Jones) managed, at the last minute, to notch a seventh consecutive month of gains, marking one of the longest bullish streaks in 30 years. The Nasdaq lost 1.5% (three weeks earlier, it was on track for an eight-month winning streak).
December, which kicks off this Monday, marks the return to regular trading on Wall Street following the Thanksgiving holiday, and the mood is downbeat, with losses between -0.7% and -0.8% (Dow Jones).
Despite successful Black Friday sales, with record online spending on November 29 and 30, the atmosphere remains gloomy due to a spike in long-term interest rates. This trend began in Japan this morning, where the 10-year yield soared by 4.2% to a record 1.878% (+7.6bps), the 20-year added 6bps to 2.893%, and the 30-year was up 5bps at 3.3900%.
US T-Bonds also tightened, with the 10-year rising 6.5bps to 4.0970%, and the 30-year up 6.6bps at 4.737% (despite an 87% consensus expecting a third Fed rate cut in nine days). This sparked a clear deterioration in Bunds (+6.5bps to 2.756%), French OATs (+7.7bps to 3.482%), and Italian BTPs (+6.2bps to 3.4700%).
Optimism fueled by hopes for another Fed rate cut in December may have been overplayed last week. Doubts are emerging regarding the "progress" of the Washington-led peace plan, which has been rejected by Europeans, contested by Kyiv, and not commented on by the Kremlin.
One encouraging sign on Wall Street last week was the broad sector participation in the rally: the upward momentum appears less dependent on the AI theme, as illustrated by the recent weakness in Nvidia, which did not prevent the S&P 500 and Dow Jones from rebounding thanks to a resurgence in healthcare stocks that had underperformed year-to-date.
A less concentrated market rally is generally good news, as it means a wider array of opportunities for investors, allowing for portfolio diversification beyond just AI specialists.
While valuations have become more attractive and market sentiment remains solid, the main driver of the bull run is, of course, the prospect of another US rate cut next week.
For markets to maintain their momentum, the Fed will need to cut rates and inflation will need to be kept under control without significant economic deterioration, warns Citi's star strategist Scott Chronert. "In short, the soft landing scenario must remain intact," he emphasizes.
Additionally, a "Santa Claus rally" cannot be ruled out: December is traditionally a favorable month for the S&P 500, which averages a gain of 1.4% to 1.5% in 74% of cases, according to the Stock Trader's Almanac.
Beyond this potential seasonal effect, participants who feel they missed out on bargains during the recent market weakness may be tempted to buy on dips.
On the economic data front, the day has been disappointing in Europe: the French HCOB Manufacturing PMI, compiled by S&P Global, fell from 48.8 in October to 47.8 in November, signaling a slight acceleration in the contraction of the manufacturing sector in the eurozone's second-largest economy.
Across Europe, the HCOB Manufacturing PMI for the eurozone declined from 50 in October to 49.6 in November, signaling a return to adverse conditions in the sector as it dipped below the key 50 mark.
The index's decline is mainly due to a drop in new orders, indicating renewed headwinds for demand. However, production growth has persisted for a ninth consecutive month.
Market attention will turn this afternoon to the US ISM Manufacturing Index, ahead of its Services component due Wednesday--two releases expected to confirm the robust health of the US economy.
In London, Brent crude is up 0.2% at $63.3, and WTI is also up 0.2% at $59.5. The euro is strengthening sharply against the dollar, up 0.3% to $1.1635. Silver has smashed a new record at $57.5 (a 99% increase since January 1), gold is up 0.4% at $4,240, while Bitcoin began to plunge early this morning, dropping 6.6% to $84,400 for no apparent reason other than "large hands" selling since last night.
In French corporate news, Bureau Veritas is among the biggest CAC 40 losers on Monday morning after RBC analysts downgraded the stock to "underperform" from "sector perform," with a price target cut from 28.5 to 26.5 euros.
TotalEnergies announced that its subsidiary, TotalEnergies EP Nigeria, has signed an agreement to sell a 40% stake in exploration licenses 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 has finalized the acquisition of a 51% majority stake in Prima, a direct insurance specialist in Italy, a deal announced on August 1 for 500 million euros (0.5 billion EUR).
LVMH stated Friday evening that 1,899,397 shares had been acquired as part of the mandate entrusted to an investment services provider (ISP) on February 17, with these shares to be cancelled as previously announced.
