(BFM Bourse) – The Paris Stock Exchange is up significantly this Wednesday at midday, while a victory for the Republican candidate for the American presidential election is now official. The CAC 40 rebounds above 7,500 points.
The indecision was only short-lived. The Paris Stock Exchange, like all world stock markets, takes note of the confirmed return of Donald Trump to the helm of the world's largest economy.
According to a count published by CNN, Donald Trump currently has 276 electors compared to 219 for Kamala Harris, which is well above the 270 electors necessary for a victory.
At midday, the CAC 40 rose 1.30% to 7,501.95 points, even gaining more than 2% at the height of the session.
A “sell the news” to come?
“So far, markets are following the same scenario of 2016 when Trump won, stocks are rallying while long-term US Treasury bonds are sold off in anticipation of a fiscal expansion,” says Gordon Shannon, manager portfolio manager at TwentyFour Asset Management/Vontobel.
Indeed, Donald Trump's program is considered inflationary, which causes a rise in bond yields. The rate on the 10-year US Treasury bill climbs 15.4 basis points (or 0.154 percentage points), to 4.444% compared to 4.287% the day before. However, higher American rates are favorable to the dollar, which explains the fall of the euro, the euro zone currency collapsing by 1.7% to 1.0749 dollars against the greenback this Wednesday.
However, the market fears that Trump's election will also result in a resurgence of significant trade tensions, with the Republican candidate planning to increase customs duties.
“We believe the focus will shift to the inflationary consequences of tariffs and reduced immigration. The US Federal Reserve (Fed) has refrained from commenting so far in order to maintain a neutral stance and protect its independence, but its reaction to these policies will be decisive for the evolution of asset prices,” continues the specialist.
The Fed will also deliver its monetary policy decision this Thursday evening at the end of its two-day meeting. Investors are counting on a 25 basis point (0.25 percentage point) cut in its key rates.
“A 'sell the news' is not impossible in the coming days, a fairly common phenomenon on the markets when an event has already been worked on in advance by market operators”, wishes to warn Alexandre Baradez, head of market analysis at IG France.
Luxury, defense at the top of the increases
On the stock side, several stocks are progressing on the Paris Stock Exchange following the victory of the Republican candidate. Luxury benefits from forecasts of a more favorable environment for consumption, LVMH, Hermès and Kering taking 1.6%, 2% and 3.1% respectively. In the same vein, Essilorluxottica, sometimes associated with the world of luxury, gained 3.2%.
All aeronautics and defense groups are making progress, supported by the hope of an increase in European military budgets. Dassault Aviation and Thales take 2.8% and 1.8% respectively.
Vallourec jumped 5.5%, one of the biggest increases in the SBF 120, benefiting from Donald Trump's energy policy which should result in more oil drilling.
In terms of publications, investors gave Crédit Agricole a red card in reaction to disappointing quarterly results. The title of the listed structure of the mutual bank lost 5.7% and showed the biggest drop in the CAC 40.
On other markets, oil is falling again, penalized by the strengthening of the dollar because black gold is exchanged in dollars. The January contract on North Sea Brent lost 1.5% to $74.43 per barrel while the December contract on WTI listed in New York lost 1.5% to $70.89.
Sabrina Sadgui – ©2024 BFM Bourse
