Frances CAC Ignores French Politics, Following China’s Policy Higher

Closing Changes in European Markets (Performance on the Day):

• European equity markets closed mostly neutral after an initial wave of buying enthusiasm.
• The France CAC 40 emerged as the standout performer, climbing +0.8%, supported by gains in the luxury and technology sectors, despite domestic political unrest.
• The UK FTSE 100 also posted a solid gain of +0.5%, driven by strength in energy and financial stocks.
• Meanwhile, other major indices underperformed:
  • Germany’s DAX and Italy’s FTSE MIB closed lower, reflecting a cautious outlook.
  • Spain’s IBEX also ended in negative territory, weighed down by weak performances in banking and industrial sectors.

US Equities: Profit-Taking and Declines

In contrast to European markets, US stock indices experienced a downturn, with the Nasdaq leading the decline at -0.8%. A round of profit-taking hit several high-performing stocks after their recent rallies, intensifying the selling pressure.

• Nvidia (NVDA) dropped -3.5%, as concerns over potential Chinese anti-monopoly investigations weighed on the stock.
• Shopify (SHOP) slid -3.1%, reflecting broader tech weakness.
• Other notable declines included:
  • Meta (META): -2.6%
  • Tesla (TSLA): -2.0%, following an initial rally to a three-year peak before profit-taking set in.
• Overall, European markets displayed mixed performance, with gains in France and the UK offset by declines in Spain, Italy, and Germany.
• Regional indices remained sensitive to sector-specific movements and economic data, with stronger performances in luxury and energy stocks balancing out weaknesses in banking and industrial shares.
• Investors are closely monitoring macroeconomic developments and central bank actions, which continue to drive market sentiment across Europe.

Treasury Yields and Market Response

As China loosens monetary policy, Treasury yields rose modestly across the curve, increasing by 2-3 basis points. Despite this, skepticism persists in the bond market, with traders weighing the potential long-term impacts of China’s economic measures, considering that the last stimulus package didn’t satisfy the markets.