CAC40: back above 8,000Pts with support from Wall Street

(CercleFinance.com) - The Paris Bourse ended the session with a gain of around 0.
5%, and the CAC40 seems to be firmly established above the 8,000 mark (towards 8,023Pts).

Wall Street, which was a little hesitant at the opening (the S&P500 was content with +0.1% and the Nasdaq remained heavy with a -0.2% decline), is firmly on the upward path, with +0.7% for the Dow Jones (which is back above 38.000), +0.6% for the S&P and +0.5% for the Nasdaq.

And despite a resurgence of interest-rate tension, the VIX eased back -4%, as the prospect of a conflagration in the Middle East receded somewhat.

Wall Street continued to consolidate on Wednesday, with investors once again massively selling off technology stocks, led by semiconductors... and things aren't getting any better for this sector on Thursday.

We believe that the artificial intelligence craze is now over, and recommend greater exposure to cyclical and value stocks", wrote Danske Bank this morning.

Today's US macroeconomic data will also fuel fears that interest rates will remain high for longer than previously expected.

The 'Philly FED' index, calculated by the Philadelphia Fed, climbed 12 points to 15.5 in April, its third consecutive positive figure and its highest level since April 2022... while the consensus was for a decline of -1.5Pt.

'Nearly 38% of manufacturing companies reported an increase in overall activity this month, while 22% reported declines; 40% reported no change', say the surveyors.

They added that the new orders index rose by seven points in April, its second consecutive positive figure, and that the current deliveries index increased by eight points to 19.1.

The number of registered unemployed remained stable at 212.000, while a slight weekly increase in the number of claimants was expected (to 215,000).

The index of leading indicators, which is supposed to forecast the evolution of economic activity in the United States, fell again in March, announced the Conference Board, which sees this as a sign of slowing growth.

The precursor index fell by 0.3% last month, to 102.4, after rising by 0.2% in April, the employers' organization said in a press release on Thursday.

The ConfBoard cites a "fragile", even "recessionary" outlook for the US economy, which it considers penalized by rising household indebtedness, high interest rates and persistent inflation.

From his point of view, growth should tend to slow down in the second half of the year, leading him to anticipate a deceleration in GDP growth in the second and third quarters.

Sales of existing homes in the USA fell by 4.3% between February and March, to an annualized rate of 4.19 million, seasonally adjusted, according to the National Association of Realtors (NAR).

The median sale price reached 393.500, up 4.8% year-on-year, and the inventory of unsold existing homes rose by 4.7% to 1.11 million at the end of March, representing 3.2 months of inventory at the current rate.

Although they have rebounded from cyclical lows, home sales are stalled because interest rates have not made any major moves", explains NAR chief economist Lawrence Yun.
First-time buyers are making a small comeback... but the parenthesis has just closed, with the 30-year rate back above 4.73%.

The weakness of the US economy is not impressing IMF boss Kristalina Georgieva, who is revising upwards the growth outlook for the United States, which is accumulating record levels of debt.

On the bond market, the morning's lull fizzled out, with the yield on 10-year US Treasuries rebounding by +4pts to 4.632%, close to the five-month highs reached on Tuesday, while the 2-year was again close to 5.00% (at 4.990%).

European Treasuries fell back to their annual lows, with the German Bund yield up +2pts to 2.4910%, and the OAT yield (+2pts) back above 3.00%, with an intraday 'peak' at 3.029%.

Oil prices are stabilizing, caught between yesterday's data showing a rise in US crude inventories and a geopolitical climate that remains very tense, not to mention a call for a boycott of Venezuelan oil from the USA.

In London, Brent crude oil was up 0.3% to $87.6 a barrel, while US light crude (WTI) advanced by just over 0.6% to $83.2.

Gold is still holding firm, with the ounce holding at $2,380.

On the value front, Danone announced this morning sales of 6.79 billion euros for the first quarter of 2024, down 2.5% due to strongly negative perimeter (-5%) and currency (-3.2%) effects, and despite a positive contribution of +1.7% from hyperinflation.

Forvia reported first-quarter 2024 sales of 6.53 billion euros, down 1.7% on a reported basis but up 3.1% organically, outperforming global automotive production by 390 basis points.

For the first quarter of 2024, Edenred reported total revenues of 685 million euros, up 21.4% (+20.5% on a comparable basis), including operating sales of 625 million, up 18.8% (+16.9% on a comparable basis).

Barclays renewed its 'overweight' recommendation on Air Liquide on Thursday, while raising its target price for the stock from 190 to 220 euros.

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