CAC40: bullish fireworks on eve of '3 Witches' event

(CercleFinance.com) - The Paris Bourse set off on an algorithmic bullish funicular in early trading, with the CAC40 rising from 7,508 (+0.
25%) to 7,620pts (+1.7%) after Christine Lagarde's press conference.
Such a rise remains a "classic" on the eve of a "3 Witches" session which will conclude a 9th week out of 10 up (including 6 in a row), a 6th month of consecutive gains (and an 11th out of 12).

With such a stubbornly bullish underlying trend, ending the month of October at its zenith is anything but a surprise...
The Euro-Stoxx50 today remains well behind the CAC, with a maximum of +1.2% (around 4.970), but this is enough to post almost +3% on the October maturity.
As expected, the European Central Bank (ECB) has finally aligned its strategy with market expectations by cutting rates again (-25pts to 3.25% on the 'Repo').
At her press conference, Christine Lagarde - speaking from the Slovenian capital - was cautious about the timing of future rate cuts, but did hint at 'signs of slowdown' in activity.
As it happens, she has always given priority to inflation ('on the right trajectory') and the markets expect her to make growth her priority... and a step seems to have been taken in that direction (synonymous with further stimulus measures).

Christopher Dembik of Pictet points out: "The slow pace at which the cost of money is falling in the eurozone is a problem for companies, particularly small and medium-sized ones, which are faced with far from favorable financing conditions in a context of shrinking margins and falling demand.
Recent indicators, in particular the latest PMI indices, have highlighted the slowdown in the European economy, accentuated by Germany's current difficulties.

The latest consumer price figures confirm that inflation is back below the ECB's 2% target.

The eurozone's annual inflation rate stood at 1.7% in September 2024, compared with 2.2% in August, according to Eurostat, which thus revised downwards by 0.1 points its flash estimate for last month published on October 1.


There were bullish fireworks at the start of the session on Wall Street: the Dow Jones index (+0.4%) set a new all-time high at 43,288 points, the S&P500 at 5,881 (now +0.3%) and the Nasdaq closing in on 18,500Pts.

The US session will be enlivened by a number of statistics: US retail sales rose by 0.4% sequentially in September, according to the Commerce Department (after +0.1% in August), and by +0.5% excluding vehicles and equipment.

In quarter-on-quarter comparison, US retail sales rose by 1.3% over the third quarter as a whole compared with the second quarter, including a 1.1% increase excluding the automotive sector.

US industrial production, on the other hand, fell by -0.3%, symmetrically to August's +0.3% (revised from +0.8%).

The Fed, which publishes these figures, explains that the strike at 'a major civil aircraft manufacturer' (i.e. Boeing) reduced industrial production by around 0.3% in September, and that the effects of two hurricanes also subtracted around 0.3%.

Also according to the Federal Reserve, the capacity utilization rate in US industry deteriorated by 0.3 points to 77.5% in September, a level 2.2 points below its long-term average (1972-2023).

After rising for two weeks, weekly jobless claims in the US fell again last week, a further sign of the resilience of the US labor market.

Manufacturing activity in the Philadelphia region rose much more than expected according to the local Fed survey, with the Philly Fed's diffusion index of general current activity rising from 1.7 in September to 10.3 in October, its second consecutive increase.

Survey indicators for new orders and shipments also rose, returning to positive territory this month, while the employment index fell, suggesting stable employment conditions.

Both price indices fell slightly, but continue to point to overall price rises. Growth expectations over the next six months were more generalized this month, with most future indicators rising.

Following Lagarde's press conference, benchmark eurozone bond yields tended to rebound: +3.5pts for the ten-year German Bund to 2.2100%, from +3.4 to 2.943% for the French OAT of the same maturity.

On the foreign exchange market, the euro fell by -0.4% to $1.0820, or -1.5% over one week.
Oil rallied slightly ahead of the afternoon announcement of US oil inventories, and despite signs of a tentative lull in the Middle East.

Brent crude (+0.2%) is trading not far from $74.5 a barrel and US light crude (+0.3%) around $70.7.

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