2024-11-11 17:54:00
The Paris Stock Exchange ended sharply up 1.20% on Monday, putting aside fears of increases in customs duties for European and Chinese companies after Trump‘s victory at the White House.
The flagship CAC 40 index gained 88.21 points to settle at 7,426.88 points. The CAC 40 notably fell sharply on Friday, by 1.17%.
“Uncertainties remain” after the American presidential election “and European assets are in zigzag while waiting to understand the pricing policy for European products exported to the United States,” comments Florian Ielpo, head of macroeconomic research for Lombard Odier IM.
The American president-elect wants to increase import taxes from 10 to 20% for products entering the United States, which worries Europeans.
He also promised to go up to 60% for those coming from China, which should not help the situation of the world’s second largest economy, sluggish for several months, and on which many French companies depend, notably luxury heavyweights, for their exports.
Investors’ eyes were also turned towards China, after a new announcement from Beijing to support its economy.
China, the second largest economic power on the planet, announced an increase of 780 billion euros in the debt ceiling of local authorities. The country has multiplied recovery plans in recent months in the hope of giving a boost to domestic activity.
“One of the potential effects of Trump’s victory over China was its impact on stimulus measures, and so markets were hoping for bigger measures” than what was announced on Friday, commented Lynn Song, economist at ING .
However, according to Florian Ielpo, “the Chinese administration wishes to retain the capacity to act” in the event of a “potential trade war” with the United States and “reserves the option of developing more economic stimulus” depending on future decisions. policies of Donald Trump.
Saint-Gobain in first place
The materials giant Saint-Gobain posted the strongest growth of the session in the CAC 40, up 3.48% to 89.10 euros, crossing the threshold of 89 euros for the first time.
The stock was supported by a buy recommendation from Jefferies bank. The group should present new financial objectives in 2025 “and its five-year objectives will allow Saint-Gobain to increasingly catch up with its competitors, whose valuation is higher”, estimate Jefferies analysts.
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**Interview with Florian Ielpo, Head of Macroeconomic Research at Lombard Odier IM**
**Interviewer:** Thank you for joining us today, Florian. The Paris Stock Exchange saw a significant rise yesterday, with the CAC 40 index up by 1.20%. What do you think drove this rebound despite the recent uncertainty following the U.S. presidential election?
**Florian Ielpo:** Thank you for having me. The rebound in the Paris Stock Exchange can be attributed to a combination of market correction and investor sentiment. After the sharp decline of 1.17% last Friday, many investors likely saw an opportunity to buy in at lower prices. Additionally, markets often react positively to short-term political developments, hoping for clearer paths forward.
**Interviewer:** You mentioned uncertainties lingering after the American election. Could you elaborate on what specific concerns investors are facing, particularly regarding trade policies?
**Florian Ielpo:** Certainly. One of the main concerns is the president-elect’s proposal to raise import taxes on foreign goods from 10% to 20%. This potential increase could impact European and Chinese companies significantly, leading to higher prices for consumers and possible retaliatory measures from affected nations. Investors are keenly watching how this will affect the pricing of European products in the U.S. market.
**Interviewer:** How do you see these trade tensions evolving in the next few months, especially for European exporters?
**Florian Ielpo:** The situation is quite fluid. If the new administration moves forward with increasing tariffs, we could see a substantial re-evaluation of European assets. Companies that rely heavily on exports to the U.S. may face tighter margins and could struggle to pass increased costs onto consumers. However, if negotiations lead to a less aggressive stance on tariffs, we could see renewed confidence in European markets.
**Interviewer:** What advice would you give to investors navigating this uncertain landscape?
**Florian Ielpo:** Diversification is key. Investors should consider a mix of asset classes and international exposure to mitigate risks associated with specific regions or sectors. Staying informed and flexible will also be crucial as new information about trade policies and their implications emerge.
**Interviewer:** Thank you, Florian, for your insights. It seems like we are in for a period of volatility as markets adjust to the new political landscape.
**Florian Ielpo:** Absolutely, and thank you for having me. It’s important for investors to remain vigilant and adaptable in these changing times.
