European markets closed down on May 7, 2025, as investors awaited the Federal Reserve's decision on interest rates. The CAC 40 index fell for the third consecutive time, a streak not seen since early April, losing 0.91% to close at 7,626.84 points. Similarly, the Eurostoxx 50 decreased by 0.60%, ending at 5,231.83 points. This downturn was partly influenced by a decline in the pharmaceutical sector following a controversial appointment in the United States. The FTSE 100 index also ended its historic streak of 16 consecutive increases, which had allowed it to recover 14.29%.
Meanwhile, in New York, the Dow Jones was up by 0.48% at 41,025.81 points as of 5:40 PM local time. Investors were exercising caution ahead of the day's key event: the meeting with the U.S. central bank. The Fed Funds rate is expected to remain unchanged in a range between 4.25% and 4.5%. However, the comments from Fed Chair Jerome Powell, who has faced scrutiny from former President Donald Trump, will be closely monitored.
Analysts at Amplegest believe the Fed should maintain a cautious bias and retain as much flexibility as possible. Adding to the cautious sentiment among investors was the anticipation of a meeting between Chinese and American representatives scheduled for this weekend in Switzerland, aimed at de-escalating trade tensions before formal negotiations commence.
In a bid to support its economy, China announced measures including a 10 basis point decrease in its benchmark interest rate and an injection of liquidity. Economic statistics released on the same day revealed a 0.1% decline in retail sales within the Eurozone for March, aligning with expectations following a 0.2% increase in February. Year-on-year, retail sales grew by 1.5%, slightly below the anticipated 1.6% and down from 1.9% previously.
Germany saw a 3.6% increase in industrial orders for March, surpassing the consensus forecast of a 1.4% rise. On the stock front, Legrand stood out within the CAC 40 after reporting quarterly results that exceeded expectations, while Scor also gained traction for similar reasons. In contrast, Sanofi faced declines, along with most European pharmaceutical stocks, following the appointment of Vinay Prasad to a position within the Food and Drug Administration in the U.S. Prasad is known for his opposition to vaccine mandates and mask-wearing during the COVID-19 pandemic. Veolia also faced pressure following its first-quarter earnings report.
Across the Atlantic, American stock markets exhibited mixed results as investors awaited the Fed's decision. Hopes remained for potential trade negotiations between Washington and Beijing. By 5:15 PM, the Dow Jones was up 0.42% to 41,103 points, while the Nasdaq dropped by 0.40% to 17,614 points. Walt Disney emerged as a standout performer, rising 9.71% to $101.03 following a robust quarterly earnings report and the announcement of its expansion into Abu Dhabi.
Disney reported earnings per share of $1.45 for the period from January to March, exceeding the expected $1.19. Operating profit surged by 15% to $4.4 billion, with revenue hitting $23.6 billion, a 7% increase compared to the same quarter in 2024, and surpassing the $23.14 billion forecast by analysts.
AMD also reported impressive results for the first quarter of 2025, with net income soaring to $709 million, marking a staggering 476% increase from the same period last year. Adjusted earnings per share reached 96 cents, beating the consensus estimate by 2 cents, while revenue climbed 36% to $7.438 billion, significantly above the Wall Street target of $7.12 billion.
Conversely, Uber's quarterly results were mixed. The company reported a net profit of $1.776 billion, a stark improvement from a loss of $654 million a year earlier. However, this figure was affected by previous revaluations of its holdings. Uber's diluted earnings per share stood at $0.83, exceeding forecasts of $0.51. Despite this positive news, the stock fell by 5.60%.
As the markets continued to react to the looming Fed decision, analysts noted that no significant economic publications were anticipated for the day. The focus remained on the Fed's stance regarding interest rates and the ongoing trade discussions with China. The market was not expecting any concrete actions from the Fed, but the outcome of the meeting would likely shape future monetary policy amidst persistent inflationary pressures.
In summary, the global markets faced a day of uncertainty as they awaited the Federal Reserve's decision. The potential for easing trade tensions between the U.S. and China provided a glimmer of hope for investors, while individual company performances continued to drive movements in stock prices.
