CAC40: manages to save 7350, Nasdaq sets 5th record

(CercleFinance.com) - The Paris Bourse reduced its losses thanks to Wall Street's strength (new record for the Nasdaq): the CAC40 gave up between -0.
6 and -0.7% and seems able to preserve the 7,350Pts support in a wait-and-see market (low volume with 1.3BnE traded) after Moody's decision to downgrade France's sovereign rating and two days ahead of the Federal Reserve's monetary policy committee announcements.
The euro-Stoxx50 was also down -0.3% at 4,950, but the S&P500 climbed +0.4% to 6,075 and the Nasdaq set a new record at 20,085pts: the 5th in 7 sessions, with an annual gain of +33.5%.
At this stage, the S&P 500 is posting an annual gain of 29.4%, putting it in a good position to line up a second year of gains of over 30%, after the 26% achieved in 2023.

The bulls could keep the upper hand (it's the home stretch for balance sheet dressing) between now and Wednesday, with the Fed's much-anticipated decisions.

A quarter-point easing is almost fully on the table (consensus 90%), and investors will be watching for comments from Fed Chairman Jerome Powell at a press conference on the pace of further cuts.

With the Fed having to cope with still-solid growth in the US, but also with a slight reawakening of inflation, investors should remain cautious until the US central bank's statement.

USD 'stats' remain robust, with a 'boom' in the services sector, according to the preliminary results of S&P Global's PMI survey published on Monday.

The composite 'flash' index measuring activity in services and industry came in at 56.6 this month, compared with 54.9 in November, setting an almost three-year high.

The index measuring the manufacturing sector fell to 48.3, after 49.7 last month.

In his report, Chris Williamson, S&P Global's chief economist, highlights the 'boom' in the tertiary sector, which grew last month at its fastest pace since the US economy reopened in 2021.
The sector's dynamism is consistent, he says, with annualized GDP growth of over 3% in December.
In the US, on the economic front, the most important statistic of the week will be the PCE price index, the Federal Reserve's preferred measure of inflation... but the FED will already have lowered its rates

A very different mood in Asia, with the deterioration in China's economic outlook, confirmed this morning by poor indicators, could also weigh on the trend as the year draws to a close.

Official statistics published on Monday show that the rise in retail sales of consumer goods slowed in November in the country, with a year-on-year increase of 3%.

The week ahead will also be marked by the publication, on Tuesday, of US retail sales for November, followed by the third estimate of US GDP for the 3rd quarter, expected on Thursday.

The economic agenda is also intense in Europe, with the release of preliminary PMI activity indices this morning, ahead of the conclusions of the Bank of England (BoE) meeting on Thursday.

The 'flash' composite PMI index published by HCOB, which measures overall activity in France, rose to 46.7 this month, from 45.9 in November, but remains below the 50-point mark, indicating a decline in activity.

The decision by Moody's to downgrade France's credit rating on Friday evening, which seems to have taken many observers by surprise, could also rekindle fears about the impact of the political crisis on the French economy.

But on the bond market, this has little impact: the BUnd eases by -2Pts to 2.227%, our OATs erase -1Pt to 3.0210%... i.e. 79Pts of 'spread' versus 78 on Friday 13th.

Its comments on future deficits are quite damning, but the fact that the agency is maintaining a 'stable' outlook on its rating for the time being, which is also in line with those of S&P and Fitch, means that this is more a piece of first-hand information than a factor likely to move the market massively", moderates Jim Reid, market analyst at Deutsche Bank.

On the earnings front, the most closely watched publications will be those from US groups Micron, Accenture, Nike and FedEx.

Copyright (c) 2024 CercleFinance.com. All rights reserved.