CAC40: benefits from W-Street euphoria (+2%) post US CPI

(CercleFinance.com) - Finally, some really good news on Wednesday.

The Paris Bourse jumped +1% and the CAC repositioned itself above 7,500Pts, following the publication of a US CPI in line with expectations, and even slightly better than expected in 'core' data (excluding volatile price elements).

The 3 main US indices have jumped from +1.5% (Dow Jones) to +2.3% (Nasdaq) since 2.30 p.m., and interest rates have suddenly eased from -12 to -14 basis points.
In terms of sectors, banks soared by +2.8%, semiconductor and consumer stocks by +2.3%, and "networks" by +1.7%.

The "10-year US" fell by 4.79% to 4.646%, the "30-year" by 4.985% to 4.865%, and the "2-year" by 4.365% to 4.2260%.

Investors are returning to a scenario of 2 FED rate cuts, in June (65%) and December (almost 50%).
This sudden fall in US rates has boosted European debt: Bunds are down 10.5pts to 2.516%, our OATs are down 13.7pts to 3.337%, Italian BTPs are down 16.5pts to 3.6760%.
The OAT/Bund spread contracts to +82Pts (due to the feeling that the Bayrou government will escape censure tomorrow), in addition to the pleasant surprise of the US CPI.
According to the Labor Department, the US consumer price index rose by 2.9% in December 2024 compared with the same month in 2023 (as expected), an annual rate in line with expectations and up 0.2 points on November.

Excluding energy (-0.5%) and food (+2.5%), two traditionally volatile categories, the underlying annual inflation rate came out at 3.2% last month, a level slightly below economists' consensus.

On a sequential basis, i.e. between November and December 2024, US consumer prices rose by 0.4% unadjusted and by 0.2% excluding energy and food

Economic activity declined in New York State in January, according to companies responding to the Empire State Manufacturing Survey. The overall index of economic conditions fell by fifteen points to -12.6.

New orders fell slightly, while shipments were virtually unchanged.

Meanwhile, labor market indicators showed stable employment levels, but a decline in the average length of the working week. Increases in input and selling prices accelerated.

Companies were more optimistic that conditions would improve in the months ahead.

This morning, investors took note of inflation data for France. Over one year, consumer prices in France rose by 1.3% in December 2024, a stable annual rate compared with November, in line with the provisional estimate published last week by Insee.

The markets are anticipating a hectic second half of the week, with a flurry of earnings releases and an intense macroeconomic agenda.

It's off to a good start for US banks, with good Q4 results: rises of between +3.8% and +6.5% are seen for Morgan Stanley and Blackrock (+3.7%),(+4%), Goldman Sachs, Citi and Wells Fargo (+5.2%)... but JPMorgan remains a little behind (+1%).

The strength of consumer spending and the country's economic outlook remain to be assessed in the light of Donald Trump's first policy decisions.

Other elements to watch: Brent crude rebounds by +1% to $80.90 (if it passes $81, this will affect inflation forecasts) and WTI soars by nearly +1.2% to $77.85 (close to resistance at $78).
On the currency front, the dollar retreats by -0.1% (to 1.03150 against the euro, its too rapid rise could handicap US exports).

In news from French companies, Esker claims its best year ever, with sales for the full year 2024 of 205.3 million euros, up 15% at constant exchange rates and on a reported basis.

Under the framework agreement signed with TenneT in May 2023, and following the first contracts announced in March 2024 for the BalWin3 and LanWin4 links, Nexans reports that it has won the contract for the LanWin2 project, worth one billion euros.

Voltalia announces the start of construction of the Los Venados solar project, with a total capacity of 19.7 megawatts, in the Tolima region. The Group's first project in Colombia, it is scheduled for commissioning in the first quarter of 2026.


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