After a choppy session, the Paris stock exchange ended the day at 7,959 points (-0.29%), its lowest level of the day, dragged down by the defense sector, with Safran falling -2.4% and Thales -1.5%. This comes as a tentative peace plan is taking shape regarding the Ukraine situation, under the aegis of the United States. Negotiators from Kyiv have reported "progress" compared to the initial 28-point Trump plan.
Danone and Publicis also posted significant declines, dropping -1.7% and -1.6% respectively.
Across the Atlantic, the Nasdaq soared by +2.3%, fueled by a red-hot semiconductor sector, while the S&P 500 gained 1.4%. Notably, Frankfurt outperformed, rising over 0.7% with support from Bayer (+10%). However, the macroeconomic backdrop remains more subdued, as reflected in Germany's IFO business climate index, which slipped slightly to 88.1 in November from 88.4 in October, defying expectations for a modest increase to 88.5.
Like other European markets, Paris suffered from last week's surge in volatility, a renewed risk aversion largely triggered by Wall Street's turbulence, where Nvidia's strong results failed to dispel concerns about the potential overvaluation of major U.S. tech stocks.
Unexpectedly, the November futures expiration--which wrapped up last Friday and was expected to kick off the traditional year-end "Santa Claus rally"--instead marked a sharp halt to a six-month bullish streak, with indices abruptly returning to early September levels.
December, however, is off to an upbeat start on Wall Street, with the S&P 500 up 1.4% (reclaiming the former support at 6,700 points) and the VIX volatility index easing by -9.5% to 21.30. This scenario was somewhat predictable with Thanksgiving just 48 hours away and Black Friday 72 hours off--the first a holiday, the second a half-session with 80% of participants absent.
Next up are the year-end "window dressing" moves, and some hope to see the traditional "Santa Claus rally," with Monday potentially marking the kickoff in a "buy the dips" mode. Since the market reversal, the S&P 500's annual gain has shrunk to around 12%, down from nearly 19% since January 1 as of late October.
Some see the recent pullback as an overreaction by investors who have yet to grasp the full economic revolution that AI could bring in the years ahead. Others believe investors are simply "exhausted" after a near-uninterrupted rise since "Liberation Day" and are looking to lock in profits as the year draws to a close.
Markets could shift as early as tomorrow, with the release of September retail sales and producer price figures, followed the next day by third-quarter growth data and, most notably, the highly anticipated PCE index--the Federal Reserve's preferred measure of inflation.
"A Fed rate cut in December would bolster our growth and cyclical positioning, justifying a spectacular year-end finish," Citi strategists noted last Friday.
In the bond market, the 10-year OAT eased by 2 basis points to 3.454%, while the equivalent Bund was unchanged at 2.698%. In the U.S., the 2035 T-Bond dropped a symbolic 1 point to 4.054%, the 30-year eased by 1.6 points to 4.689%, and the 2-year rose by 1 point to 3.524%.
In London, Brent crude added 0.4%, reaching $62.8 per barrel. The euro was steady against the greenback at around $1.15, while gold rebounded 0.8% to $4,095 an ounce.
In French corporate news, Thales announced a strategic partnership with CNN MCO, a division of Equans France, and CS Group, a Sopra Steria subsidiary, to modernize three amphibious helicopter carriers (PHA) for the French Navy.
Airbus reported it has been awarded a contract by Space Communication Technologies (SCT), Oman's national satellite operator, for the OmanSat-1--a next-generation OneSat telecommunications satellite and its associated system.
Casino unveiled plans to adapt and strengthen its financial structure, aiming to complete related work by the end of the second quarter of 2026, as well as financial targets for its "Renouveau 2030" plan.
Alstom announced the signing of a memorandum of understanding with Angola's Ministry of Transport to assess and plan the Blue Line project, a future 50-kilometer coastal rail line between Cacuaco and Benfica.
Finally, Euronext announced the launch of the "European Aerospace and Defence Growth Hub," bringing together 15 companies from France, Hungary, Italy, and the Netherlands to support the sector's supply chain.
