The control room of Euronext, the company that manages the Paris Stock Exchange (AFP / ERIC PIERMONT)
The Paris Stock Exchange is moving sharply higher on Wednesday as a return of Donald Trump to the White House becomes clearer, despite the risk for Europe of having additional customs duties imposed.
At this stage, Republican candidate Donald Trump is in the lead with 266 voters, compared to 219 for Democrat Kamala Harris. The former president has already claimed his victory, acquired according to Fox News, the only major American media to have projected a final result.
At 10:00 a.m. (09:00 GMT) on the Paris Stock Exchange, the flagship CAC 40 index jumped 2.10%, gaining 157.580 points to 7,564.65 points.
“This reaction is surprising and counterintuitive with the return of Trump,” commented Alexandre Baradez, head of market analysis at IG France.
But one “possible explanation is that Trump's victory risks forcing China to increase its support for its own economy” and that Europe “must also step up its game” as well, he continued.
Economists and investors expect Donald Trump to put in place new customs barriers, cut taxes and deregulate the American economy.
The objective he stated during his electoral campaign is to see customs duties improve tax revenues and serve as a negotiating argument against countries which, like China, are “tearing apart” the United States, he said, while encouraging businesses to relocate.
The Republican wants to increase customs duties on all imports to 10 or 20%, depending on the product, and even to 60% on Chinese imports, and up to 200% on vehicle imports from Mexico.
“The European Union, already weakened by competition from cheaper Chinese electric vehicles and the end of its dependence on Russian gas, faces a precarious situation. A trade war with the United States could further accelerate the continent's economic woes , particularly in its manufacturing sector, which has already been strongly affected,” explained John Plassard, investment specialist for Mirabaud.
In reaction to the emerging results of the American election, the dollar climbed on Wednesday against the majority of other currencies. The dollar has not experienced such a jump against the euro since March 2020, soaring 1.54% to 1.0764 dollars per euro around 10:00 a.m.
On the bond market, where debt already issued is traded, the interest rate on 10-year American government loans jumped to 4.40% compared to 4.27% at the close the day before, and that at maturity two years rose to 4.24%, against 4.18%.
This is a sign that the market expects “stronger growth and perhaps higher inflation”, a combination which could “slow down, or even stop”, the rate reductions planned by the American central bank (Fed ), underlined Stephen Dover, director of the Franklin Templeton Institute.
Penalized by its retail banking activities in France, the Crédit Agricole banking group published a net profit down 12.8% in the third quarter, to 2.08 billion euros. Around 10:00 a.m., its action fell 4.19% to 13.71 euros.
Euronext CAC40
