CAC40: back to 7600, record highs for DAX40, S&P500 and D-Jones

(CercleFinance.com) - The Paris Bourse stagnated in the red for a long time (-0.
2% to -0.3% until around 2:30 pm, after -0.5% around 1 pm) before reversing course and climbing symmetrically by +0.3% to 7,600pts (in the wake of Stellantis, Airbus and Safran at +1.6%).

The Frankfurt Stock Exchange continues to climb, and with +0.7%, sets a new all-time record at nearly 19,520Pts... the Euro-Stoxx50 confirms that it has broken the 5,000 barrier, at 5,045, very close to the 5,070 record set on September 27), in the wake of Wall Street, where numerous records are falling, starting with the S&P500 with +0.7%.

The broad index opened the week with a bullish "gap" to a new all-time high of 5,857Pts, while the Dow Jones also broke a record above 42,930Pts (its Friday closing record was 42,863).

The Nasdaq was not to be outdone, with a flamboyant +1% to 18.525, down 0.68% on the July 10 record of 18,647, 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 smooth 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 rallied by more than 6.5%, 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 for the major US banks, should also set the pace for the coming sessions.

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

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

Investors' eyes will also turn to Beijing, from where Chinese gross domestic product (GDP) figures will be released on Thursday, providing 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 remained stable a few days ahead of the European Central Bank's (ECB) monetary policy meeting, with the benchmark German ten-year yield up +1Pt to 2.284%, our OATs symbolically down -0.5Pt to 3.0390, and Spanish 'Bonos' easing -2Pts to 3.003%.

On the foreign exchange market, the euro is virtually unchanged against the dollar (down -0.2% at 1.0915), against a backdrop of questions about the Fed's next rate cuts and uncertainty surrounding next month's presidential election.

Oil prices retreated -1.6% to $77.5 a barrel in London, with WTI down -1.5% to $74.4 on the NYMEX... but caution remains the order of the day as we await a possible counter-attack by Israel following Hezbollah's recent strikes on a military base near Haifa.

Note that Stellantis is up 1.5% (rebounding to 12.00E from a low of 10.8E) as Carlos Tavarez does not rule out the closure of group plants in Europe, following the example of Wolkswagen.


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