Market reactions to the disappointing Non-Farm Payroll report led to declines in major U.S. indices, with significant losses in tech stocks. European markets showed mixed performance, with the CAC40 experiencing slight dips despite weekly gains. Consumer confidence in the U.S. fell to its lowest since July, accompanied by rising inflation expectations. Improvements in France’s trade balance contrasted with Germany’s industrial production decline. Bond markets reacted negatively to economic data, while corporate earnings mixed, notably affecting Amazon’s stock.
Market Reactions to Job Data and Consumer Confidence
The eagerly awaited Non-Farm Payroll (NFP) report turned out to be a bit of a letdown. Following the release, American household morale showed signs of decline, pushing the three major indices into negative territory: the Dow Jones dropped by 0.2%, the S&P 500 fell by 0.3%, and the Nasdaq saw a decline of 0.6%. Notably, tech giants like Marvell Technology, Amazon, and Alphabet experienced significant downturns, with losses of 4.7%, 3.5%, and 3% respectively.
Job creation numbers fell short of expectations, coming in 25,000 to 30,000 below consensus estimates. However, revisions from the previous two months revealed an upward adjustment of 100,000 jobs, marking a notable shift from the downward revisions seen throughout 2024.
European Market Performance and Economic Indicators
The Paris Stock Exchange witnessed a slight decline of 0.2%, hovering around the 7,990 to 8,000 points mark. The CAC40 index dipped by 0.3% to approximately 7,980, yet it remained close to the 8,000 threshold, buoyed by strong performances from Vinci and Société Générale, which rose by 2.6%, and BNP Paribas, up by 2%. Conversely, L’Oréal and Pernod Ricard weighed down the index with declines of 4.2%.
Despite a minor pullback on Friday, the CAC40 has managed to show a weekly gain of about 0.4%, reflecting the market’s resilience in processing negative news, whether related to the DeepSeek incident or the revival of trade tensions. Meanwhile, the Euro-Stoxx50 and DAX40 indices achieved new all-time weekly highs of 5,350 and 21,900 points, respectively, both outperforming the CAC40 with an overall increase of 1%.
On the consumer front, the latest survey from the University of Michigan reported a surprising drop in American consumer confidence, plunging to 67.8 from 71.1 in January, marking the lowest level since July. This decline was accompanied by increased inflation expectations, which rose from 3.3% in January to 4.3% in February, the highest level since November 2023.
In Europe, France’s trade balance showed improvement in December, with the deficit decreasing to 3.9 billion euros from 6.34 billion the previous month, driven by a 4% increase in exports. Meanwhile, Germany’s industrial production fell by 2.4% in December, the lowest level since May 2020.
In the bond markets, investors reacted to a flurry of economic data, leading Bunds and OATs to erase their modest gains from the previous day. The Euro weakened slightly against the Dollar, trading around 1.0365, while gold prices surged, reaching new highs towards $2,885, reflecting a 4% weekly increase.
In corporate news, Amazon’s results did not fully satisfy investor expectations, causing a pre-opening stock drop of 3%. Despite reporting a record profit of $20 billion for the fourth quarter, the company’s revenue forecasts fell short, particularly in the cloud segment. On the other hand, Airbus reported the delivery of 25 aircraft in January, while Stellantis announced an enhanced partnership with Mistral AI to develop an AI-driven onboard assistant.
Lastly, finance group Viel & Cie reported robust growth in 2024, with consolidated revenue reaching 1.18 billion euros, marking a 9.4% increase. Oddo BHF has also reaffirmed its ‘outperform’ rating on Société Générale, raising its price target from 36 to 42 euros after the bank’s recent results.