CAC40: reaches 7,500 in the wake of W-Street records

(CercleFinance.com) - Buyers have held the upper hand since the opening, and the Paris Bourse has consolidated its lead (+0.
7%), in a more optimistic market a few hours before the start of the Federal Reserve's two-day meeting. The CAC40 index is close to 7,500 points, while the Dow Jones (+0.3%) reopened at a new all-time high of 41,740, while the S&P is 10pts (0.2%) shy of its all-time high (+0.4% at 5,656pts).

On the eve of the Fed's monetary policy decisions, however, initiative is likely to remain relatively limited today, with modest spreads and low volumes.

A growing number of investors now believe that the Fed will opt for a 50 basis point cut in its key rates, a scenario assimilated by 67% of traders according to CME's FedWatch tool.

This is important because, since the beginning of 2009, the FOMC has never gone against the expectations established by the majority of the market at the start of a week marked by the Fed," notes Michael Brown, strategist at Pepperstone.

In terms of figures, retail sales in the USA were virtually stagnant at 0.1% sequential in August, according to the Commerce Department (after +1.1% in July compared with the previous month).

Excluding the sometimes volatile automotive sector (vehicles and equipment), US retail sales were also up 0.1% last month on the previous month, following a sequential rise of 0.4% in July.

On the upside, US industrial production rebounded by 0.8% in August, thanks in part to a strong upturn in the production of motor vehicles and equipment (erasing a 0.9% sequential decline the previous month).

The latter rose by almost 10% last month after a fall of around 9% in July, and excluding the automotive sector, manufacturing output rose by just 0.3% month-on-month.

Still according to the Federal Reserve, the capacity utilization rate in US industry improved by 0.6 points to 78% in August, a level nevertheless 1.7 points below its long-term average (1972-2023).

On the Old Continent, the ZEW index of investor sentiment was published this morning.
It fell again in September: at +3.6, it was 15.6 points below its August value. In addition, the assessment of the economic situation in Germany continued to deteriorate, with the index dropping 7.2 points to -84.5, its lowest level since May 2020.

In terms of interest rates, expectations of monetary easing seem to be "in the air": government bond yields on both sides of the Atlantic are no longer falling.

The yield on 10-year US Treasuries remains stable at 3.625%, at its lowest level since May 2023, while its German equivalent is down 2.12% to 2.1360%, our OATs are up 2.5pts to 2.852%, and BTPs are holding steady at 3.4800%.

On the currency markets, the dollar regained a few fractions on the eve of the Fed's announcements: the euro retreated by 0.15% to 1.1115.

On the oil front, oil prices showed firmness, with Brent gaining 0.3% to $73.2, and a barrel of US light crude (WTI) breaking through its $70 resistance, without however benefiting from a massive buying movement.

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