CAC40: rates at record lows, stock markets switch to 'full risk on
(CercleFinance.com) - The Paris Bourse climbed +0.
6% and the CAC40 returned to its best levels since the end of August, the index now standing 1.7% shy of its all-time record.
The DAX (+1% to 16,700) has been flying from record to record since the beginning of December, despite an economy in recession (-0.1%) and a -3.7% drop in industrial orders.
In Paris and Frankfurt, there was a veritable rush to buy into the automotive sector, with Renault up 5.7% and Stellantis up 3.6%... in anticipation of an easing of interest rates that would revive the car market.
Wall Street has just reopened higher (as expected since early this morning) and the Nasdaq-100 (+0.5%) is back at its highs of 16,000pts, while the Dow Jones (+0.3%) is close to its record highs.
The VIX falls back below 12.7, demonstrating that investors are going full risk on
Gains accelerate slightly as the US private sector created only 103.000 jobs in November, a figure well below expectations, according to the latest survey by private firm ADP.
This indicator, which comes two days before the much-anticipated official statistics from the Labor Department, has triggered a new bout of weakness in bond yields.
At less than 4.15%, the yield on US ten-year paper is back to its lowest level since the end of August.
Apart from the ADP employment statistics, investors learned on Wednesday that non-farm productivity rose by 5.2% in the third quarter, following a preliminary estimate of 4.7%.
On the trade front, the US trade deficit widened to $64.3 billion in October, compared with $61.2 billion the previous month.... it's been a long time since the accumulation of US deficits disturbed Wall Street.
Investors are still betting on a forthcoming rate cut in the US, even though Federal Reserve Chairman Jerome Powell reminded us last Friday that there was still a long way to go before inflation 74could be brought back down to around 2%.
However, markets are wavering on the timing of the Fed's next rate cut, and are eagerly awaiting Friday's release of the monthly report on US job creation, in an attempt to divine the central bank's intentions.
For the time being, according to the CME Group's FedWatch barometer, markets are assuming a 55% probability of a Fed rate cut in March.
In Europe, industrial orders in Germany have confirmed the recessionary spiral threatening the country, while stagnating retail sales in the eurozone (i.e. down including inflation) show that households are finding it hard to recover from the inflationary shock.
But beyond today's announcements, it's Friday's employment figures that will count.
Despite long rates continuing to fall sharply, the dollar continues to show strength, notably against the euro, which is down -0.05% at around 1.0790.
Oil prices continue to show their heaviness, with Brent nibbling 0.2% towards $77.1 a barrel, confirming the cautious positioning of institutional investors and traders on black gold.
In their "shock" forecasts for 2024, analysts at Saxo Banque yesterday mentioned a possible spike in oil prices to $150 a barrel by mid-year, due to stronger-than-expected demand.
In news from French companies, Sopra Steria reports that it has won two major contracts, worth a total of £369 million, from National Savings and Investments (NS&I), the British public savings bank best known for its Premium Bonds.
Orpea announces the launch of a capital increase with cancellation of the pre-emptive subscription right, reserved for the Caisse des Dépôts et Consignations, MAIF, CNP Assurances and MACSF Epargne Retraite consortium, and with a priority subscription right granted to existing shareholders.
This fund-raising for an amount of 1.16 billion euros will result in the issue of 65,173,064,696 new shares at a unit price of 0.0178 euros.
Finally, Nokia and Orange announced on Wednesday that they had achieved 800Gbps throughput on the Dunant transatlantic cable, which links France and the United States over a distance of some 6,600 km.
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