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CAC40: the race for records is on, rates down sharply

( - The Paris Bourse (+0.
9%) seems to be heading for record highs, and the CAC40 (7,450) is back to its best levels since late July/early August, with the index now within 1.5% of its all-time high.

The Euro-Stoxx50 (+0.8%) is close to its highs, and 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 as in Frankfurt, there has been a veritable rush into the automotive sector, with Renault up 5.7% and Stellantis up 3%... in anticipation of an easing of interest rates that would revive the car market.

Wall Street is moving higher (as expected since early this morning) and the Nasdaq-100 (+0.2%) returned to its highs of 16,000pts at around 3:45 p.m., while the Dow Jones (+0.2%) is also close to its record highs.

The VIX falls back below 12.7, demonstrating that investors are going full risk on

Buyers are keeping their hand in as the US private sector created just 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 USA, even though Federal Reserve Chairman Jerome Powell reminded us last Friday that there was still a long way to go before inflation would be brought back down to around 2%.

However, they are hesitant about the Fed's timetable, and are eagerly awaiting Friday's release of the monthly report on job creation in the USA to try to guess the central bank's intentions.

For the time being, the markets are counting with a 55% probability on a Fed rate cut in March, according to the CME Group's FedWatch barometer.

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 is Friday's employment figures that will count.

Despite long rates continuing to fall sharply, the dollar remains firm, particularly against the euro, which is down -0.05% at around 1.0790.
In Europe, yields continue to ease, with OATs at 2.755% (-4Pts and -85Pts in 2 months) and Bunds at 2.208% (-3Pts)... and Italian BTPs resolutely fall back below 4.000%, down 54Pts to 3.950%.

Oil prices continue to show their heaviness, with Brent dropping -2.2% to $75.3 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 (+10%) has announced 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 capital increase, worth 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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