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CAC40: fails to hold on to 8000Pts, as US indices decline

( - The Paris Bourse (+0.
62%) saw its lead melt away in the wake of Wall Street, which saw its initial gains (+0.5%) evaporate in their entirety, as US indices returned to equilibrium (Nasdaq lost 0.4%, S&P500 and Dow Jones sank into the red).

Despite a fall of 8.040 to 7,981, the CAC40 is still outperforming the other European markets, thanks to LVMH (+2.8%), which is dragging Hermès (+2.3%) in its wake: the Euro-Stoxx50 is only gaining 0.1% to 4,910 (slowed by ASML's -6.5% fall), while Frankfurt and London are only gaining +0.1% to +0.5%.

Indices seem unaffected by the reappearance of a strong sell-off in bonds since the beginning of April, reinforced by Jerome Powell's latest comments (on Tuesday), which seem to rule out the prospect of a rate cut in June and suggest that only 2 easings would be on the agenda in 2024.

Rates would therefore remain above 5.25% for another 6 months, a zenith synonymous with ever-increasing debt servicing.

With economic indicators in the US surprisingly on the up, market participants are focusing on the resilience of the economy, which would compensate for the disappointment on the money front.

Investors want to continue believing that yields - now at their highest level for 15 years - will cause only limited damage to the real economy.

The surge in the yield on US ten-year Treasuries above 5% last October (the US 2-year is back in this zone, at 4.9700%) had, for the record, ended in a consolidation phase for the world's stock markets.

Ten-year paper, which had reached five-month highs yesterday, eased - at last - by -4pts to 4.62% (comparable level at end-November 2023).

On the European bond market, benchmark yields are easing slightly: the ten-year German Bund is down slightly (-2Pt) at around 2.467%, our OATs are down -2.3Pt at 2.9800%, while Italian BTPs are doing better, down 4.5Pts at 3.8650%.

Investors also want to focus on the corporate earnings season, which is currently in full swing.

Dutch semiconductor giant ASML reported unsurprising first-quarter results this morning and confirmed its annual forecasts, but announced a 5% increase in its dividend: sales disappointed, however, and the stock lost more than -6%.

On the other hand, the day's economic agenda was relatively quiet.

The final inflation figures for the euro zone for April were published in the morning. According to Eurostat, it stood at 2.4% in March, versus 2.6% in February, thus confirming its flash estimate for last month, while the European Union's figure fell from 2.8% to 2.6% month-on-month.

On the FOREX, the Euro gained 0.2% to 1.0640, while the $-Index eroded by -0.1% to 106.25.

Brent crude oil corrected by -0.9% to $89.3, gold remained close to its highs at $2,390, while silver held steady at $28.7.

In the UK, inflation eased to an annualized 3.2% in April, from 3.4% in March, paving the way for a future rate cut by the Bank of England.

On the stock front in France, Oddo BHF reiterated its 'outperform' rating on LVMH, with its price target raised from 835 to 857 euros, suggesting a 12-month upside potential of around 10%, the day after the world's number one luxury goods company reported its quarterly activity. LVMH posted sales of 20.7 billion euros in the first quarter of 2024, with organic growth of 3% (-2% on a reported basis).

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