CAC40: back to 7,600, buoyed by DAX40, S&P & Dow records

(CercleFinance.com) - The Paris Bourse stagnated in the red for a long time (-0.
2 to -0.3% until around 2:30 p.m.) before reversing course and climbing symmetrically by +0.3% to 7,600Pts.
The Frankfurt Stock Exchange continued its ascent and, with +0.7%, set a new all-time record at over 19,500Pts.500Pts... with the Euro-Stoxx50 confirming its crossing of the 5,000 mark, at 5,040, in the wake of Wall Street, where numerous records fell, starting with the S&P500 with +0.7%.
It began the week with a bullish "gap" to a new absolute zenith of 5,855Pts, while the Dow Jones climbed above 42,880Pts (its closing record on Friday).
The Nasdaq was not to be outdone, with a flamboyant +1% to 18,525, less than 0.68% from its record of 18.647 on July 10, in the wake of Nvidia +3.5%, Marvell +3.6% and Applied Materials +4.1% (not forgetting the psychological impact of 'Space-X with the gentle recovery of a nearly 200-ton launch vehicle component from its launch pad).

Investors are now feeling more confident in Europe ahead of Thursday's meeting of the European Central Bank (ECB), where further rate cuts are expected to be confirmed.
After a difficult summer, the world's stock markets have returned to the upside over the past two months, buoyed by the prospect of both the Fed and the ECB making decisions likely to bolster economic activity.

Since August 6, the CAC40 has recovered more than 6%, a favorable trend which should persist ahead of the ECB's monetary policy decisions to be announced on Thursday.

Indeed, many observers believe that recent poor European figures - led by the PMI - should prompt the ECB to accelerate its rate cuts.

With disinflation continuing, ECB rate cut expectations now point to the prospect of a further 25bp rate cut this week, followed by another in December.

"Fiscal policies are taking a restrictive turn", points out Bruno Cavalier, Chief Economist at Oddo BHF.

Under these conditions, why maintain a restrictive monetary policy?" asks the analyst.

The earnings season, which kicked off last Friday with the major US banks, should also set the pace for the coming sessions.

The week's agenda includes, among others, publications from Dutch semiconductor equipment giant ASML and video-on-demand platform Netflix.

In addition to central banks and earnings, US retail sales figures, due on Wednesday, are also likely to move markets.

Investors' eyes will also turn to Beijing, from where Chinese gross domestic product (GDP) figures will be released on Thursday, giving valuable clues as to the state of the economy in the world's second-largest economy, which is currently undergoing a major stimulus plan.

On the bond market, the yield on ten-year US government bonds, which had reached new highs since the end of July last week at 4.11%, set a new record at 4.14% with Wall Street's full risk-on.

Bunds remain in demand just a few days ahead of the European Central Bank (ECB) monetary policy meeting, with the benchmark German ten-year yield up +1Pt to 2.284%, our OATs stable at 3.0450, and Spanish 'Bonos' easing -2Pts to 3.0200.

On the foreign exchange market, the euro is virtually unchanged against the dollar, holding steady at around 1.0930, against a backdrop of questions about the Fed's next rate cuts and uncertainty surrounding next month's presidential election.

Oil prices are down -1.6% to $77.5 a barrel in London, but caution remains the order of the day as we await a possible counter-attack by Israel following the recent strikes by Hezbollah.

Stellantis is up 1.5% as Carlos Tavarez does not rule out the closure of the group's factories in Europe, following the example of Wolkswagen.


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