Paris Stock Exchange Ends Monday at Equilibrium Amidst Fed Concerns and Budget Debates
Paris, January 12 – The Paris Stock Exchange concluded Monday’s trading session at equilibrium, with the CAC 40 index showing a slight decline of 0.04%, closing at 8,358.76 points. This cautious stance reflects ongoing concerns regarding judicial threats against the US Federal Reserve (Fed) and the stalled budget debates in France, despite the index reaching a new intraday high of 8,378.76 points.
On Friday, the leading Parisian index had experienced a significant increase of 1.44%, surpassing its previous session and closing records for the first time since autumn. However, Monday’s trading was marked by a more reserved attitude from investors.
Growing Pressure on the Federal Reserve
The market’s apprehension stems partly from an unusual video message delivered by Fed Chairman Jerome Powell on Sunday. Powell announced that the monetary institution, which has been under pressure from Donald Trump for months to adopt a more flexible monetary policy, is now facing a procedure from the Department of Justice, potentially leading to criminal charges.
Kevin Thozet, a member of the investment committee at Carmignac, stated, “While pressures on the Fed are not new, the current situation represents a new escalation.” Steve Sosnick of Interactive Brokers added, “One of the market’s fears is that a politically motivated Fed might deviate somewhat from its mandate.”
The US central bank is tasked with maintaining long-term inflation around 2%. Politically imposed rate cuts, in an economy that may not require them, could carry an inflationary risk. Thozet emphasized, “When the independence of such long-standing institutions is questioned, it legitimately causes concern.”
French Budget Debates Remain Stalled
In France, financial markets are closely monitoring the ongoing debates to adopt a budget for 2026, which have become bogged down. A new meeting between the government and parliamentary groups from the Socialist Party, the presidential camp, and the right began Monday afternoon in Bercy, aiming to advance towards the adoption of the 2026 budget, as reported by the Ministry of Economy.
The meeting was led by Amélie de Montchalin, Minister of Action and Public Accounts, ahead of the National Assembly’s resumption of public debate on the finance bill. Thozet noted that the Parisian market “has suffered for several months from a risk premium compared to its European counterparts due to this political instability.”
On the bond market, the yield on France’s ten-year bond decreased to 3.50% from 3.52% on Friday’s close. Its German equivalent, a European benchmark, followed suit, dropping to 2.83% from 2.86%.
Company News: Abivax, Saint Gobain, and Capgemini
In corporate news, French biotechnology company Abivax saw its shares surge by over 30% on Monday, before moderating its gain to 5.00% at 104.00 euros by the end of the session. This surge followed a report by La Lettre suggesting that American group Eli Lilly was prepared to acquire Abivax for “15 billion euros.” However, this information was denied in the afternoon by the French Ministry of Economy, which stated it had not received “any request” for prior authorization of foreign investment from the American pharmaceutical group.
Industrial company Saint Gobain climbed 2.62% to 86.82 euros, following a positive recommendation from Bank of America. Conversely, software provider Capgemini fell 4.24%, pressured by a rating downgrade from Morgan Stanley.
Source: Euronext CAC40, AFP
