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On the Paris market in any case, Donald Trump’s victory will have caused intense volatility, but no significant difference at the close, in the red, down 0.51% for the CAC 40, to 7,369 points. At the session’s high, the flagship index was up to 7,572 points. The DAX ended with an even more pronounced decline, of 1.13%.
It is now official, Donald Trump will recover the keys to the White House in January, at the end of a campaign full of twists and turns, and marked by intense suspense. Contrary to what a majority of polls suggested, the victory of the Republican candidate was clear and unquestionable.
If initially, European markets were supported by the fall of the euro against the dollar, beneficial to exporting industries, subsequently, investors seemed to be more concerned about commercial risks and international uncertainty which are likely to emerge with the election of the businessman.
On the economic front, Donald Trump’s program is supported by several personalities from the business world, and in particular by the boss of Tesla and X Elon Musk. Among the strong measures he supports, Donald Trump wants to tax 10 to 20% more on the importation of foreign products and even up to 60% for products from China.
Significant customs duties to finance, according to him, a reduction in income taxes for Americans after several years of high inflation. The Republican candidate also pledged to make the United States “the world capital of bitcoin and cryptocurrencies”.
On the tax side, he wants to make income from social security tax free and lower corporate tax from the current 21% to 15%. On the energy side, the Republican wants to halve prices by notably increasing the production of gas and oil within the American territory.
“This should accelerate business investments…especially in AI!”, notes Christopher Dembik, investment strategy advisor at Pictet AM. “We can therefore venture to consider that this will be positive for the American stock market and that the effect could even be amplified by the reduction in Federal Reserve rates which should not be hampered, in the immediate future, by the victory of the Republican.”
“Moreover, geopolitics could come back to the forefront quickly. The transition period in the United States, during which the outgoing party is a lame duck due to its inability to be truly operational, could encourage States at odds with the United States to act preemptively before Trump takes office.”
The Fed will therefore be able to come to terms with the identity of the next President for the two-day FOMC meeting, which will end this evening.
“The question of the attitude of the Federal Reserve also arises while the decision is awaited [ce] evening”, for Alexandre Baradez (IG France). “An additional rate cut of 0.25% is anticipated by the markets but Jerome Powell’s statements will be carefully scrutinized because if Donald Trump, supported by Congress, pursues an expansionist budgetary policy like that of its predecessor, the risk that inflation will be slow to return to 2% is very real, or even that inflation will rebound. It is worth remembering that core PCE inflation, the Fed’s preferred measure, is still running at 2.7% and has not made further progress towards the target for 4 months.
The overheated American 10-year bond now exceeds 4.44%.
On the value side, several stocks suffered from the risk of customs tariffs. This is the case for the spirits groups Rémy Cointreau (-4.5%), very exposed to increased customs duties, and Pernod Ricard (-3.3%). Historically sensitive to trade tensions, auto equipment manufacturers Forvia and Valeo lost 3.6% and 3.1%. Furthermore, Crédit Agricole SA lost 3.8%, suffering from disappointing results in the third quarter.
In terms of increases, Vallourec (+6.9%) was buoyed by Trump’s victory, his desire to increase hydrocarbon production in the United States expected to translate into increased demand for tubes for the oil industry. . The defense groups Thales (+2.9%) and Dassault Aviation (+4.3%) are driven by expectations of an increase in European military budgets because the United States could further divert its military attention from Europe. Publicis and Stellantis gained 1.7% and 1.8% respectively. These groups, very exposed in the United States, are on the front line to benefit from Trump’s tax measures.
On the other side of the Atlantic, the main indices wildly applauded the election of Donald Trump. The Dow Jones jumped 3.57% to 43,729 points and the Nasdaq Composite jumped 2.95% to 18,983 points. The S&P500, the reference barometer of risk appetite in the eyes of fund managers, also rose sharply, by 2.53% for its part, to 5,929 points.
An update on other risky asset classes: around 8 a.m. this morning on the foreign exchange market, the single currency was trading at a level close to $1.0760. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $71.60.
On the macroeconomic agenda this Thursday, to follow as a priority the weekly registrations for unemployment benefits at 2:30 p.m., the American monetary policy decision at 8:00 p.m., before the traditional press conference at 8:30 p.m.
KEY GRAPHIC ELEMENTS
The 7,465/7500 points gave way on Wednesday 30/10, on gap, in thick volumes, and in conditions of notable volatility. The short-term bearish message is thus mechanically validated. The next identifiable level is 7,340 points.
Note that Friday’s session will have “saved” the appearance of the weekly candle, but that the new floor of 7,340 points is weakened. The ultra-volatile session of Wednesday November 6 will have further weakened this level, which was hit very precisely.
Caution, therefore, in a market environment dominated by nervousness.
FORECAST
Considering the key graphical factors that we have identified, our opinion is neutral on the CAC 40 index in the short term.
We will take care to note that crossing 7465.00 points would revive the buying tension. While a break of 7340.00 points would restart the selling pressure.
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