CAC40: awaiting US inflation figures

(CercleFinance.com) - The Paris Bourse was little changed on Friday morning, with caution limiting spreads ahead of US inflation figures, the markets' last major event of the week.
The CAC40 index is trading at around 7760 points, up moderately (+0.3%) after the previous day's strong advance.

The Paris market had climbed 2.3% yesterday to climb back above the 7700-point threshold, thanks to a surge in the luxury goods sector, buoyed by a second stimulus package for the Chinese economy.

At this stage of the week, the CAC index has posted a weekly gain of 3.5%, enabling it to return to positive territory for both September (+1.7%) and the year as a whole (+2.7%).

On Wall Street, US equity markets continued to set new all-time highs, with the S&P 500 hitting another all-time high last night.

Investors welcomed the good results posted by the technology heavyweights, but above all the announcement of confirmed 3% growth for the US economy in the second quarter, a sign of the resilience of activity on the other side of the Atlantic.

It looks like all the good news is really good news for the markets at the moment", commented a London-based trader this morning.

But investors' attention will now turn to the latest US inflation figures, which will certainly influence the Federal Reserve's next decisions on interest rates.

Fears about price trends have eased of late in the wake of several reassuring statistics, but could resurface in the event of an unpleasant surprise.

The consensus expectation is that the 'PCE' index, the Federal Reserve's preferred measure of inflation, will fall to 2.2% in August, from 2.5% in July.

This morning, investors took note of French consumer price figures. According to Insee's provisional estimate at the end of the month, consumer prices in France rose by 1.2% year-on-year in September 2024, marking a clear slowdown after +1.8% the previous month.

These weaker-than-expected figures would reinforce the likelihood of a further rate cut by the ECB at its meeting scheduled for October 17.

Yields on US Treasuries continue to show firmness, confirming that the recent rotation has prompted investors to turn to riskier assets.

Ten-year Treasuries are stabilizing at around 3.79%, having briefly breached the 3.80% threshold yesterday for the first time since early September.

The European bond market did not follow suit, with the German ten-year easing slightly towards 2.16%.

The dollar, which had hit annual lows against the euro at the start of the week, is attempting to recover, bringing the single currency back towards 1.1140.

The oil market confirms its decline after the short-lived rebound following the formalization of China's stimulus plan at the beginning of the week, as supply and demand fundamentals regain the upper hand.

Brent crude rose by 0.5% below $71.8 a barrel, while US light crude (West Texas Intermediate, WTI) gained 0.6% to $67.9, as Saudi Arabia reportedly abandoned its objective of bringing prices back to the $100 a barrel zone.

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