CAC40: closes in the red, weighed down by Wall Street and luxury goods

(CercleFinance.com) - The Paris Bourse ended the session down 0.
81%, at 7574 points, penalized by the sharp decline in the luxury goods sector (-3.5% for LVMH, -2.9% for Kering, -2.7% for Hermès), not forgetting Renault, which gave up 3.2%.

The CAC40 had been flirting with 7655 points (+0.2%) before being caught cold by a more negative-than-expected opening on Wall Street.

The S&P500 is now down 1.3%, behind the Dow Jones (-0.7%) and ahead of the Nasdaq (-2.2%).
Meanwhile, the 'VIX', the stress index, has jumped +18% towards 20, a pivotal threshold that could foreshadow a stock market correction.

A drop that investors in the Eurozone had not seen coming, because it was not at all obvious.... except for the geopolitical context and the risk of a conflagration in the Middle East, which nobody believed in until yesterday, when Israeli tanks entered Lebanon at around 8pm on Monday evening (an offensive unprecedented since 2006).

The link with the cautious comments made by Federal Reserve Chairman Jerome Powell is not obvious, since the US indices had not reacted to them by Monday evening.

The Fed boss said that monetary policy in the USA would evolve "over time", with no pre-established direction, and that decisions would be taken "meeting by meeting".

From a "macro" point of view, manufacturing activity remained stable at 47.2 in the US in September, according to the monthly survey published on Tuesday by the Institute for Supply Management (the index is stagnating on an annual low).
While the new orders sub-index rose by 1.5 percentage points to 46.1 from 44.6 the previous month, it still remains in contraction territory below the 50-point mark.
The employment sub-index fell to 43.9 from 46 in August.

Job openings in the US increased in August, according to the latest 'Jolts' survey published Tuesday by the Labor Department.

The number of job openings reached eight million on the last day of August, compared with 7.7 million a month earlier, as strong employment in construction (+138,000) and administration (+78,000) more than offset weakness in services (-93,000).

On a year-on-year basis, however, the figure is down by 1.3 million jobs, suggesting an easing of the labor market.

In Europe, the latest stats are rather reassuring: this morning, investors took note of the HCOB PMI index for the French manufacturing industry, produced by S&P Global. It came in at 44.6 in September, up on August (43.9), but still below the unchanged 50 mark.

On the other hand, the HCOB PMI index for eurozone manufacturing, produced by S&P Global, fell from 45.8 in August to 45 in September, its lowest level of 2024, signalling a further deterioration in the sector's economic situation.

The first inflation estimate for the region in September confirmed the easing of inflationary pressures, with a score of 1.8%, below the ECB's 2% target, with core inflation falling back to 2.7%.

Indicators such as these - pointing to a contraction in activity and a slowdown in consumer prices - should bolster the scenario of a further ECB rate cut on October 17.

With the tense situation in the Middle East, crude oil dropped back almost 4% to $74.7 a barrel in London.
On the bond front, however, there was a rush to buy the safest Treasury bonds: the 10-year Bund eased by 11pts to 2.026%, our OATs by 11.5pts to 2.812%, while T-Bonds of the same maturity shed 9pts to 3.722%.

The dollar is once again a safe haven against the euro, falling -0.6% to around $1.106/E.

In French company news, LVMH announces the sale of Off-White, the international luxury streetwear brand founded in 2012 by Virgil Abloh, to the New York-based brand management company Bluestar Alliance, in a transaction whose terms are not disclosed.

Lagardère and LVMH announce the completion of the sale of Paris Match, which joins the luxury group, a transaction carried out under the previously announced terms, 'opening a new page in the history' of the weekly founded in March 1949.

JCDecaux announces that JCDecaux Top Media, of which it is the majority shareholder, has acquired 70% of IMC, one of the leading outdoor advertising companies in Central America and number one in Costa Rica, from its founders.

Veolia announces that it will build a new heating network in London, supplying heat from the SELCHP waste-to-energy plant, in partnership with Southwark Council.

Finally, TotalEnergies announces the final investment decision (FID) for the 'GranMorgu' project on offshore block 58, Suriname, a block in which the French group is the operator with a 50% interest, alongside APA Corporation.

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