The Paris Stock Exchange has declined by 0.8% to around 7185 points, primarily due to Stellantis’s stock drop after CEO Carlos Tavares’s exit. Political instability in France raises fears of a government collapse, despite S&P Global maintaining the country’s debt rating. Economic indicators show worsening manufacturing conditions in both the eurozone and France. Meanwhile, Wall Street remains optimistic, buoyed by positive manufacturing data. In corporate news, Atos and Carrefour have made significant transactions and refinancings.
Market Overview: Paris Stock Exchange Takes a Hit
The Paris Stock Exchange is currently experiencing a decline of 0.8%, hovering around 7185 points. This downturn is largely attributed to Stellantis, which has seen its stock plummet by over 7% following the announcement of CEO Carlos Tavares’s departure. This decline occurs despite two new all-time highs on Wall Street, where the Nasdaq has risen to 19,400 (+0.9%) and the S&P 500 has surpassed 6,045 points. The political climate in France is particularly turbulent, with Michel Barnier recently invoking Article 49.3 to push through the ‘social security’ budget for 2025. The RN party has declared its intention to support the censure motion from the LFI group unless the government reverses the controversial pension law.
Economic Indicators and Corporate Developments
The economic outlook for Europe appears grim, compounded by political instability in France and the lack of a budget, which raises concerns about a potential government collapse. On a more positive note, S&P Global has chosen to uphold France’s debt rating. However, the OAT/Bund spread has widened significantly this Monday to +88 points due to political factors, with French OATs deteriorating by 3 points to 2.924%, while Bunds have eased by 4 points to 2.0440%.
In terms of economic statistics, the PMI HCOB index for the eurozone’s manufacturing sector has decreased from 46 in October to 45.2 in November, signaling a deeper contraction. Similarly, France’s PMI HCOB index for the manufacturing sector has also indicated a worsening situation, dropping from 44.5 in October to 43.1 in November—the steepest decline since December 2023.
Conversely, Wall Street is buoyed by positive reports, including the ISM manufacturing sector survey, which increased to 48.4 last month, surpassing expectations. The new orders sub-index rose to 50.4, while the prices paid index fell to 50.3. Additionally, the US manufacturing PMI, calculated by S&P Global, rebounded to 49.7 in November, slightly below the 50 mark that separates growth from contraction.
Manufacturers have noted a significant slowdown in the decline of new orders, attributed to improved domestic demand following the presidential election. Although production has decreased, the outlook for the next year among manufacturers has notably improved, as they anticipate supportive measures from the incoming administration. Economists predict the creation of approximately 200,000 jobs in November, up from the initial estimate of 12,000 in October, alongside a slight increase in the unemployment rate to 4.2%.
This data is critical for the Federal Reserve as it considers the timing of its next interest rate cuts, with investors pricing in a 67% chance of a 25 basis point reduction on December 18, according to the CME’s FedWatch tool. Interestingly, overly strong figures may be viewed unfavorably by investors concerned about potential reductions in the central bank’s economic support measures.
In corporate news, Atos has successfully completed the sale of its Worldgrid division to Alten for an enterprise value of 270 million euros, following a binding agreement established on November 5 after exclusive negotiations starting June 11. Carrefour has announced the refinancing of its two credit lines, totaling 3.9 billion euros, into a single line worth four billion euros, which includes performance indicators on decarbonization and food waste. Finally, Saint-Gobain has finalized the sale of its PAM Building subsidiary, which specializes in sanitary and rainwater drainage solutions, on November 29.