CAC40: Moderate decline, W-Street indecisive, rates ease back

(CercleFinance.com) - Scores have been frozen since 4:30 p.
m., with the Paris Bourse down by around -0.5% to -0.6%, losing 40% of the gains made the previous day.

With a 1.3% rise yesterday, the Paris market proved to be the main beneficiary of the Chinese stimulus plan, which boosted the luxury goods sector, enabling it to climb back above the 7,600-point threshold in high volumes.
China's monetary stimulus has obviously triggered a wave of optimism on the stock market, given that it echoes a larger-than-expected rate cut by the US Federal Reserve last week", explains Christopher Dembik, Investment Strategy Advisor at Pictet AM.

"But this wave of optimism could quickly lead to profit-taking and a brutal return to reality", warns the analyst.

This is what is happening in Europe, with the E-Stoxx50 at -0.5%, and on Wall Street, even though the US indices are maintaining a slightly bullish bias: the Dow Jones is down -0.5%, the S&P500 remains stable and the Nasdaq stands out with +0.3%... in balance, it's almost stable.

Opinions diverge on the direction of the equity markets, with some professionals betting on a climate favorable to risky assets thanks to the monetary easing underway, while others warn of the risk of a stock market relapse.

The day will be remembered for the dollar's new annual low below 1.1210/E and gold's new all-time high at $2.670/Oz.

In the US, after a 10.3% jump in July, new home sales in the USA contracted by 4.7% in August, according to the Commerce Department, to 716.000 on an annualized, seasonally-adjusted basis.

The median price of new homes sold was $420,600, and the average price was $492,700. At 467,000, the stock of new homes ready for sale represents a 7.8-month supply at the current rate.

On a more general note, on Wednesday the OECD revised downwards its growth forecasts for the USA and the Eurozone in 2025, considering that major risks remain around a global economy in the midst of a "turning point".

In the Eurozone, growth is still expected to stand at 0.7% in 2024, before accelerating to 1.3% in 2025, compared with +1.5% previously.
n the US, GDP growth is expected to slow from 1.1% this year to 1.2% in 2025.

In the USA, GDP growth is expected to slow, but benefit from the easing of monetary policy underway, with growth expected to reach 2.6% in 2024, then 1.6% in 2025 (instead of +1.8%).

In China, growth is expected to dip to 4.9% this year and then plateau at 4.5% in 2025, as stimulus measures are not enough to offset sluggish consumer demand and the massive correction in the property market.
On Friday, investors will be keeping a close eye on the publication of the US Consumer Price Index (CPI), the Fed's preferred gauge of inflation.

Bond markets are continuing their downward trend of the past week: T-Bonds are up to 3.785% (+5.2pts), the yield on the ten-year German Bund is up +5.5pts to 2.1900%, its French equivalent is up +6pts to 2.966%, and Italian BTPs are up +5.2pts to 3.5300%.

Oil prices fell back -1.2% to $74.2 in London: optimism about the revival of activity in China waned, and traders seemed unconcerned by the resurgence of geopolitical tension with Israeli strikes in Lebanon against the Iranian-backed Hezbollah.

U.S. light crude (West Texas Intermediate, WTI) dropped a more significant -1.4% to $70.5 a barrel after the release of U.S. crude oil inventories: they fell last week against a backdrop of lower refinery output, announced the U.S. Energy Information Agency (EIA) on Wednesday.

Crude inventories fell by 4.5 million barrels in the week to September 20, as did gasoline stocks, which were down by 1.5 million barrels.

Distillate reserves, which include heating oil, were down by 2.2 million barrels.

Refinery capacity utilization contracted to 90.9%, compared with 92.1% the previous week.

Buoyed by a weaker dollar and geopolitical tensions, the price of an ounce of gold set record after record, rising by a further 0.1% to $2,665 an ounce this morning. Its increase over the year as a whole is now approaching 30%, and 40% over 12 months.

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