CAC40: indifferent to W-Street records and interest-rate easing

(CercleFinance.com) - The contrast in trans-Atlantic performance was confirmed on Friday, with Europe sinking into greyness (-1% for the E-Stoxx50 at 4.
800) and a flamboyant Wall Street, which ended the week with a new string of all-time highs for the Dow Jones (+0.6%) at 44,020Pts, followed by the S&P500 (+0.4% at 4,996 and aiming for 6,000Pts by 10 p.m. to make its mark before the weekend).

The Nasdaq (stable at 19.280) is now just 0.1% away from its zenith of 18,301.7 of the previous day (with an average P/E of 46.85, which explodes the limits of the known' and especially the 38.6 of the 'dot.com' bubble or the 34.2 of late October 2007: it posted a performance differential of +7% over the week in relation to the E-Stoxx50.

The Paris Bourse lost nearly -1.2% around 7335Pts, penalized by the downturn in the luxury goods sector, with Kering down -7%, Hermès -4% and LVMH -2.5%.
Over the past week, the CAC40 was also down -1%, and -2.7% since January 1st, compared with +28% for the Nasdaq, i.e. a record gap of 30%!

As expected, last night the Fed cut its main key interest rate by a quarter point, its second cut in less than two months, while refraining from providing too many clues as to its intentions for the coming months.

However, its members decided unanimously to cut the main key rate, citing tame inflation tending towards 2% and the need to prevent the risks of a slowdown in growth, even if it is admittedly "progressing at a sustained pace".

Michael Brown, strategist at Pepperstone, commented: "My baseline scenario remains the continuation of a 25 basis point rate cut by the committee at the end of the next few meetings, until a neutral rate of around 3% is reached next summer.

From the analysts' point of view, Wall Street's favorable momentum should continue, particularly with the prospect of more advantageous taxation for US companies.

'In our view, Trump's second term will be marked by lower corporate taxes, deregulation of the technology sector, the introduction of tariffs designed to stimulate the US industrial sector and relocation, and policies to support crypto-currencies', stressed Yan Taw Boon, manager at Neuberger Berman.
Jerome Powell, in the course of a question, put an end to the suspense that had lasted since Wednesday morning: 'I won't resign if Donald Trump asks me to' and the boss intends to see out his term (which expires in January 2026).

With Donald Trump having expressed his intention of imposing lighter, more flexible regulations on the sector, Bitcoin set a new record above $76,000 last night, and some already see it reaching the $100,000 mark in the near future.

The fact that the S&P 500, the benchmark index for American managers, is in contact with 6,000 points should also encourage investors to consider a new short-term bullish push (despite +45% without any real correction in 12 months and one week).

On the other hand, the day was rather quiet in terms of indicators: there was no detectable reaction either in equities or in T-Bonds to the publication of the Michigan consumer confidence index.
It improved much more markedly than expected in November, according to the preliminary results of the monthly survey published by the University of Michigan on Friday.

Its confidence index rose for the fourth month in a row, reaching 73 this month compared with 70.5 in October, while economists had expected it to stand at just 71.

The report, finalized on Monday on the eve of the presidential election, shows that the sub-index measuring consumer expectations jumped to 78.5, compared with 74.1 the previous month, reaching its highest level since July 202 (Wall Street's -long- series of record highs has fostered a feeling of opulence among the more financially comfortable).

With the employment situation still solid across the Atlantic, inflation tending to moderate and stock market indices at record levels, US household morale should logically remain buoyant.
On the bond front, US 10-year T-Bonds eased 5.5pts to 4.2872%, while German Bunds of the same maturity eased -8pts to 2.3610%, our OATs -9% to 3.1130% and Italian BTPs -9.5pts to 3.65%.

In London, Brent crude oil dropped -2.5% to $3.737 a barrel, while the euro lost 0.5% against the greenback, to $1.075/E, spot -0.6% hebdo.


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