Stock Market Index CAC 40 Exceeds 0.5% Growth Amid Reduction of Trade Disputes
In a significant development, US President Donald Trump and EU Chief Ursula von der Leyen announced a new trade deal on Sunday. The agreement, which comes after months of negotiations, aims to avoid a full-blown tariff war between the two economic powerhouses [1].
The deal establishes a 15% tariff on most EU products exported to the US, although the tariff rate on US exports to the EU was not explicitly clarified [1]. The tariff applies broadly, covering most EU products, but specific sectors such as automobiles, semiconductors, steel, and aluminum remain undefined and are likely part of ongoing negotiations [1][3][4].
One of the key commitments in the deal is the EU's pledge to invest $600 billion in the US during President Trump's term, a significant portion of which adds to existing European company investments rather than fresh capital flow [3][4]. Additionally, the EU has committed to purchase $750 billion worth of US energy exports through 2028, aiming to reduce European reliance on rival energy sources and strengthen US energy dominance [4].
The deal also includes commitments to tackle non-tariff barriers affecting US industrial and agricultural exports into the EU, with the aim of improving market access [4]. However, the exact terms, particularly reductions or eliminations of tariffs on specific products such as aircraft, chemicals, generic drugs, and agricultural goods, are still under negotiation and could take time to finalize [3].
In terms of market reactions, the CAC 40 index, a benchmark for French stocks, advanced to 7,931.15 earlier in the session, but has since dropped down [2]. Several French companies, including Legrand, Safran, Capgemini, Michelin, Sanofi, TotalEnergies, Schneider Electric, Unibail Rodamco, Dassault Systemes, and AXA, are seeing gains of 1 to 1.6% [2]. On the other hand, Pernod Ricard is down 1.7% [2].
Notable gains are also seen in Airbus, Air Liquide, LVMH, EssilorLuxottica, Accor, and Societe Generale [2]. However, Kering and Orange are down 1.2% and 1.1%, respectively [2]. Companies such as Thales, Carrefour, and Publicis Groupe are experiencing losses, while STMicroElectronics is gaining nearly 3.5% [2].
This week, several prominent French companies, including Air Liquide, Orange, Hermes International, Airbus, Danone, Sanofi, Schneider Electric, Safran, Vinci, Credit Agricole, Societe Gernerale, AXA, and Engie, are slated to report their earnings [2]. The deal's impact on these companies' financial performance remains to be seen.
Furthermore, French GDP and inflation data are due this week, providing insight into the broader economic impact of the trade deal [2]. The steel and aluminum sectors will remain at 50% with agreed-upon quotas, while aerospace components, certain chemicals, and raw materials will be exempt from duties [1].
The EU chief, Ursula von der Leyen, also reportedly hailed the deal [1]. As negotiations continue, the specifics of the deal's impact on various sectors will become clearer.
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Investors in the business sector may find interest in the new trade deal between US and EU, as the agreement establishes potential opportunities for finance with the EU's pledge to invest $600 billion in the US. The deal's commitments to tackle non-tariff barriers and improve market access in the US industry, particularly for industrial and agricultural exports, might attract further investing activities. However, the exact impact on various sectors and specific companies' financial performance remains uncertain as negotiations progress.
