Paris, March 18 – The Paris Stock Exchange experienced a marginal decline at the close of trading on Wednesday, with its flagship index, the CAC 40, ultimately ceding 0.06%. The market’s performance was significantly impacted by a fresh surge in oil prices and the prevailing anticipation surrounding the European Central Bank (ECB) meeting scheduled for Thursday.
CAC 40 Dips Below 8,000 Points Amidst Geopolitical Tensions
After two consecutive days of recovery, the Parisian market was caught off guard midway through the day by escalating tensions in the Middle East. The CAC 40 index shed 4.61 points, closing at 7,969.88 points, thereby slipping below the symbolic 8,000-point threshold.
The announcement of a strike against Iranian installations on a gas field shared with Qatar triggered a new surge in the price of North Sea Brent crude. By 6:00 PM GMT, Brent crude had climbed by 3.63% to reach $107.17 per barrel, reflecting heightened geopolitical risks in the region.
Inflation Concerns Mount Ahead of Central Bank Meetings
Beyond the developments in the Gulf, investors were also met with disappointing news earlier in the afternoon regarding the American producer price index for February, which rose by 0.7%, exceeding forecasts. This data fueled renewed concerns about inflation.
Tensions also resurfaced in the sovereign debt market, as interest rates that states must offer to raise funds on financial markets began to climb. The ten-year interest rate on French bonds rose to 3.60%, up from 3.55% the previous day. Its German equivalent, a European benchmark, reached 2.94%, compared to 2.90% the day before.
These rates have been on an upward trajectory since the outbreak of the conflict in the Middle East, driven by fears of renewed inflation in Europe due to rising oil prices.
Central Banks Face Dilemma: Inflation vs. Growth
Investors are now keenly focused on upcoming meetings of several central banks to ascertain whether policymakers will prioritize the fight against inflation or opt to support economic growth, potentially by avoiding the usual lever of monetary tightening.
Fawad Razaqzada, a market analyst for the online trading platform FOREX.com, commented, “The European Central Bank remains focused on inflation, but it is becoming increasingly difficult to ignore the growth outlook.”
As expected, the U.S. Federal Reserve (Fed) maintained its interest rates unchanged on Wednesday, highlighting the still uncertain impact of the Middle East conflict on the world’s largest economy. American key rates remain at their December levels, between 3.50% and 3.75%. Earlier, the Bank of Canada also kept its key rate at 2.25% for the third consecutive time, while indicating that it was monitoring inflation risks.
Market Movers: TotalEnergies Soars, Parrot Jumps on NATO Order
Among the CAC 40 components, TotalEnergies benefited from the rise in oil prices, gaining 1.26% to 75.42 euros. The oil group’s value has increased by 35.67% since the beginning of the year.
Société Générale recorded the strongest gain of the day, rising by 2.93%, alongside the hotel group Accor, which saw a 2.09% increase.
In other markets, Bolloré SE, which encompasses activities controlled by the Bolloré family in transport, logistics, and communication, advanced by 11% to nearly five euros. This surge followed its announcement on Tuesday evening of a proposed exceptional dividend payment of “1.50 euros per share” for its 2025 financial year.
The shares of the company Parrot soared by 31.31% following the announcement of a first NATO order for surveillance microdrones, a portion of which is destined for Finland.
Source: AFP, La Gazette France
