Paris Stocks Rebound 0.76% as Fed Rate-Cut Odds Rise to 80%

The Paris stock market staged a modest rebound in early trading, fueled by renewed optimism surrounding potential U.S. Federal Reserve rate cuts. The CAC 40 climbed 0.76% at the open, reversing a nearly 3% decline from the previous week. Investors are increasingly pricing in a 25-basis-point cut at the Fed’s mid-September meeting, with the probability rising to over 80% following a weaker-than-expected U.S. employment report [1]. This shift in expectations has spurred a broader risk-on sentiment, with European benchmarks also posting gains.

The dovish turn in U.S. monetary policy has weakened the dollar against major currencies, including the yen and the Canadian dollar [3]. Traders are positioning for a potential easing cycle, which would make equities more attractive in a high-volatility environment. The move has also bolstered European markets, where investors are cautiously optimistic ahead of key U.S. data and ongoing trade developments [2]. Although the rally remains restrained, with some investors waiting for clearer policy signals, the market’s response underscores the strong influence of U.S. monetary decisions on global asset prices.

Meanwhile, corporate earnings in the CAC 40 have softened, with quarterly profits declining by 28% to 51.8 billion euros. Challenges persist from a strong euro and U.S. tariff pressures, which continue to weigh on export-driven sectors [1]. Yet, the market appears to be looking past near-term headwinds, with the French 10-year borrowing rate holding steady at 3.35%, signaling a degree of reassurance. The focus now shifts to the next Fed meeting and the release of upcoming economic indicators, which could either reinforce the current bullish momentum or introduce new uncertainties [5].

The evolving dynamics highlight the delicate balance between central bank interventions and market fundamentals. While the anticipated rate cut offers a short-term tailwind for equities, broader concerns remain over the pace of the U.S. slowdown and its global implications. Investors will be closely watching how the Fed’s actions interact with trade developments, particularly the U.S.-EU tariff negotiations, which could shape the trajectory of risk sentiment in the coming weeks [4]. For now, the market’s reaction reflects a hopeful recalibration, with traders betting that central bank support will help stabilize asset prices in an uncertain environment.