CAC40: tries to hold on to 7,200, rates up slightly

(CercleFinance.com) - The Paris Bourse was in the red, but limited the damage with a decline of -0.
6% to 7,205 (compared with -1% this morning and a low of 7,185).

The Euro-Stoxxx50 dropped 0.4%, Frankfurt 0.3%, indicating that investors are relativising the risk of higher US tariffs next year.

Wall Street stalled on Tuesday (Dow Jones down -0.5%, S&P up 0.2%, Nasdaq +0.3%) after a fine start to the week, with bond yields easing sharply following the appointment of Scott Bessent, a financial markets expert, as US Treasury Secretary.

The Dow Jones, S&P 500, Russell-2000 and Dow Transport set new all-time highs on Monday, while the Nasdaq (+0.3%) regained the 19,000-point mark.
The "number of the day" was rather reassuring: US consumer confidence improved by +2pts in November.
The Conference Board employers' organization published an index of 111.7, compared with 109.6 the previous month (revised from 108.7 on first reading).

In detail, the sub-index of Americans' assessment of their current situation rose by 4.8 points to 140.9, while the sub-index measuring their expectations rose by 0.4 points to 92.3, moving away from the 80 threshold which usually prefigures a recession.

Market participants believe that persistent concerns over the economic health of the Old Continent, led by Germany, should keep European stock markets within the narrow margins in which they have fluctuated for many weeks.

To make matters worse, yesterday Donald Trump announced his intention to increase tariffs on products from China, Canada and Mexico, a decision that could soon affect Europe too.

The American president-elect intends to impose 25% additional taxes on Canadian and Mexican products imported into the USA, while Chinese goods would be subject to an additional 10% tariff.

These statements could overshadow the Fed's "minutes", which are due to be published later this evening, following the unanimous decision by the Fed to cut rates by 25 basis points at its November 6-7 meeting.

The document could shed some light on the central bank's intentions with regard to rate cuts and its diagnosis of the health of the US economy.

In his most recent speeches, Jerome Powell noted that the US economy remained solid and that there was no need to act urgently, while keeping open the option of a rate cut in December.

According to the CME Group's FedWatch barometer, investors rate the probability of a 25 basis point rate cut by the central bank in December at 56.2%, compared with 74.6% a month ago.

New home sales fell sharply in the US in October, with high house prices and borrowing rates still weighing on demand.

Expressed as a seasonally-adjusted annual rate, sales fell by 17.3% last month to 610,000 units, according to figures released by the U.S. Department of Housing and Urban Development.000 units, according to figures released by the Commerce Department.

The median house price continued to rise (+2.7%), reaching $437,300 last month, compared with $426,000 in September and $417,500 in October last year.

This could have an impact on bond markets, which are digesting their spectacular rebound of the previous day, with T-Bonds erasing -14Pts on Monday: the '10-yr' is back +5.3Pts at 4.318% and the '30-yr' +5Pts at 4.494%.

Our Italian OATs and BTPs are completely stagnant, while Bunds are adding +1Pt at 2.2160%.

On the earnings front, US retailers Abercrombie & Fitch and Best Buy will unveil their accounts before the Wall Street opening, ahead of Dell and HP's publications scheduled for the evening.

On the currency markets, the dollar rallies strongly against the euro following Donald Trump's remarks, taking the single currency to new two-year lows around 1.0475.

Crude oil prices are little changed on hopes of a possible ceasefire between Israel and Lebanon. Brent crude advanced by 0.1% to $73.1 a barrel, while US light crude held steady below $69.


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