The French government’s recent cut in economic growth forecasts for 2024 cast a dark cloud over the markets, causing European shares to open the week on a somber note.
French Economic Growth Outlook Takes a Hit
European shares, especially French stocks, reacted adversely to the downward revision of France’s gross domestic product (GDP) forecast for 2024. The projection was slashed from 1.4% to 1%, as the ongoing repercussions of the Russia-Ukraine conflict and diminished trade with China and Germany continued to take a toll on the French economy.
The CAC 40 index nosedived by 0.43% to 7,734.6 in response to the gloomy economic forecast, while the Stoxx 600 index remained relatively stagnant at 491.6. Strikingly, the FTSE 100 index bucked the trend with a 0.41% rise to 7,724.8, signaling a mixed start to the trading week.
Banking Stocks Gain Traction Amidst the Gloom
Despite the overall pessimism, Credit Agricole managed to emerge as one of the top performers on the CAC 40, edging up by 0.2% to €12.3. The bank’s positive momentum followed its better-than-expected fourth-quarter profits in 2023.
Similarly, BNP Paribas witnessed a 0.4% increase, reaching €54.7, after announcing its revised target of achieving a 12% return on tangible equity by 2026, a year later than previously projected. However, the bank faced challenges as traders departed in anticipation of a disappointing bonus season.
Conversely, Thales encountered a setback, declining by 3.83% to €135.6. The company’s performance was adversely impacted despite being selected by Air India to provide in-flight entertainment for its widebody aircraft.
ArcelorMittal also faced a downturn, dropping by 2.61% to €24.9, reflecting the company’s entanglement in a special administration issue with the Italian government concerning its largest steel mill in Italy.
Focus on Upcoming Events
Investors are keenly anticipating the release of Turkish and Euro Area consumer confidence reports later in the week, as well as the European Central Bank Non-Monetary Policy Meeting on Wednesday.
Furthermore, the release of US FOMC minutes for the January meeting on Wednesday will offer insights into the Federal Reserve’s policy stance. Later in the week, a barrage of pivotal economic data including France’s business confidence index, business climate indicator, and purchasing managers’ index (PMI) reports from Germany, the Euro Area, and the UK, will be scrutinized by market participants.
Thursday will also witness the publication of the Euro Area and Italian inflation reports for January, while Friday’s agenda features the UK consumer confidence report for February and German GDP numbers for Q4 2023, adding to the array of influential disclosures.
