The Euronext control room, a company that manages the Paris Stock Exchange (AFP / Eric Piermont)
The Paris Stock Exchange finished down 0.92% on Friday, investors fearing that Donald Trump’s customs duties could cause revival of inflation that would delay drops in the American central bank (Fed).
The CAC 40 star index fell 72.96 points to stand at 7,829.29 points at the end. Over the week, the index, however, advanced 1.73%.
“Until now, the markets have behaved well for three reasons: economic data that has remained very correct, the anticipation that the impact of Trump’s commercial policy will be moderate and transient and that it will not prevent the Fed from lowering its rates, and last argument, a moderate Donald Trump”, explains Valentine Ainouz, responsible for the AMUNI Investment rate strategy.
However, “Trump’s latest announcements question this last point and let fear a stronger inflationary scenario that would bother the Fed in its rate cuts,” she continued, the latter being in a range between 4.25% and 4.50% since December.
US President Donald Trump again targeted Canada on Thursday, by imposing 35% surcharge, one of the highest rates announced since the start of the week, accusing the United States’s first trading partner for retalling his customs duties.
On Wednesday, the White House tenant also announced a 50% surcharge on Brazilian products, so far spared.
“The general tone has returned to an aggressive level and which reveals more full -bodied negotiations”, especially for Europeans whose situation remains uncertain, added Valentine Ainouz.
On the bond market, the session was marked by the return on the rate of the French loan at thirty years which reached 4.20%, “its highest level since the euro zone crisis in 2011”, notes Jim Reid, economist at Deutsche Bank.
This general trend of “upward pressure on long rates reflects an increase in financing needs of states”, in particular due to “the increase in funding needs for their defense, the increase in the load of interest on debt and the continuation of tax cutting policies”, explains Valentine Ainouz.
Air France-KLM interested in tap
The Portuguese government wishes to give up up to 49.9% of the capital of the national airline TAP, announced on Thursday Prime Minister Luis Montenegro by giving the “kick-off” of an operation which arouses the interest of the European companies Air France-KLM (-0.63% to 10.98 euros), Lufthansa and the IAG Group (British Airways and Iberia).
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