(News Bulletin 247) – The Parisian index ended sharply lower, caught cold by Donald Trump’s new outing which threatens to increase customs duties on products imported from China. The CAC 40 returns 1.53% this Friday, October 10. Over the week, the Parisian index dropped 2%.

Operators were not expecting a very hectic weekend on the markets. But the end of the day proved them wrong. Donald Trump has, in fact, put the question of customs duties back at the center of investors’ concerns.

The tenant of the White House used his favorite weapon, namely customs duties. Donald Trump judged this Friday, September 10 that China was “becoming very hostile” after Beijing’s restrictions on rare earth export authorizations.

In retaliation, he indicated that he was considering a “massive” increase in customs duties on Chinese goods entering the United States, in a message posted on his Truth Social network.

American indices turned downward after these statements. On Wall Street, the Dow Jones lost 1.1%, the S&P 500 1.6% and the Nasdaq 2.5% at the close of European markets. “Markets are retreating due to concerns” linked to these threats against China, observes Briefing.com

In Paris, it was also a bright red weekend for the CAC 40 which closed down sharply by 1.53% to 7,918 points. Over the week, the Parisian flagship index therefore returned 2.02%.

The Parisian index was moving close to balance mid-session while Emmanuel Macron is supposed to appoint a new head of government that same day. Like many French people, the Paris Stock Exchange is waiting to know who will be appointed to Matignon. President Emmanuel Macron has, in fact, promised to appoint a new Prime Minister by this Friday evening.

At the highest of the morning, the CAC 40 even reached 8,082.53 points, a tiny bit more than the approximately 8,081.54 points it must exceed to erase Monday’s drop (-1.36%), triggered by the resignation of Sébastien Lecornu.

For LBPAM economists, the constitution of a new government expected in the coming days remains a “slight relief for the markets because it avoids, for the moment, the call for early legislative elections”.

“But it remains to be seen whether this new government can survive for a while and pass a budget before the end of the year, which in any case will have to incorporate important and therefore costly concessions,” they add. “Despite an already high risk premium in France and a risk of systemic crisis which seems contained to us, we remain cautious on French assets in the short term because political, budgetary and rating uncertainties are likely to persist,” they conclude.

Stellantis falls

On the value side, companies in the automotive, luxury and steel sectors, sectors directly and/or indirectly exposed to customs risk, experienced a difficult end to the session. Red lantern of the CAC 40, Stellantis also turned downward, falling 7.3%, while the stock was up slightly driven by significantly increased sales (in volumes) in the third quarter.

The action of the automobile group is followed by Arcelormittal (-5.8%), and the luxury groups Hermès which returned almost 3%, and LVMH which lost 2.4%.

Technip Energies (-7.75%) and Nexans (-3.1%) were both weighed down by Exane BNP Paribas, which, according to Reuters, went from “outperformance” to “neutral” on the first and from “neutral” to “underperformance” on the second.

On other markets, the euro gained 0.4% against the dollar to 1.1613 dollars. Oil is falling in reaction to the ceasefire agreement between Israel and Hamas which reduces fears linked to supply disruptions. The December North Sea Brent contract fell 3.80% to $62.74 per barrel while the November WTI contract plunged 4.2% to $58.94 per barrel.