CAC40: -0.8% back to square one at 7,420, $ at 1.052E

(CercleFinance.com) - The Paris Bourse (-0.
8%) erased its previous day's gains, with the CAC40 falling back to 7420 points, penalized in particular by URW (-3%) and the previous day's stars, Kering and LVMH (-2.3%).

The Parisian index is catching its breath after eight consecutive sessions of gains, a momentum which has brought it close to the psychologically important 7500-point threshold.

After its wanderings of the last two months, the CAC is back on track, driven in particular by the clear recovery of luxury stocks, helped by hopes of stimulus measures for the Chinese economy.

Sectors most dependent on economic cycles, such as commodities and energy, also returned to favour yesterday, as Beijing expressed its intention of stimulating demand to bolster the recovery.
European markets consolidated overall (-0.6% towards 4.970 for the E-Stoxx50), following in Wall Street's footsteps on Monday evening (-0.6% on average), with the exception of Frankfurt, which clawed back another +0.2% and seems on course to set a new closing record, above 20,385Pts.

As a sign of this calmer climate, the spread between the yield on ten-year German Bunds (2.115%) and that on OATs of the same maturity (2.865%) continues to narrow, with the spread now only 75 basis points, compared with 88 basis points 10 days ago.
Note the perfect stability of yields on all Euro-denominated Treasury bonds.
investors were informed this morning of the level of inflation in Germany. According to the final version of the consumer price index published on Tuesday by Destatis, the Federal Statistical Office, inflation in Germany reached 2.2% year-on-year in November.

In France, political uncertainty remains unabated, with Emmanuel Macron yet to name a prime minister and the Barnier government having fallen almost a week ago.

However, "investors don't seem too alarmed by the situation", observes Jim Reid, market analyst at Deutsche Bank.

The question now is whether the last few sessions have merely been a case of catching up after the recent underperformance, or whether we should be hoping for a more sustainable upward trajectory.

The first 'test' will come on Thursday with the ECB's meeting, which is likely to result in a further 25 basis point cut in its key rates.

In view of the sluggish growth on the Old Continent, some analysts believe that the Frankfurt-based institution could decide to reduce the cost of money to lower levels than previously anticipated.
The euro appeared weaker on Tuesday, falling -0.3% against the dollar to 1.0550. The greenback advanced +0.2% on average against other currencies.

In the current difficult economic climate in the euro zone, the ECB could be led to go further in its rate-cutting cycle", says Odile Camblain, head of diversified management at Crédit Mutuel AM

ECB President Christine Lagarde recently spoke to the European Parliament about the risks to growth prospects in the euro zone in general, and in France in particular.

The rate of interest on deposits could therefore be lowered to 1.75% sooner than expected, which could have a positive impact on the French economy", stresses the fund manager.

In other French company news, Vivendi announced that its Combined General Meeting had approved, by more than 97.5% of votes cast, the proposed demerger of Canal+, Havas and Louis Hachette Group (which will combine its 66.53% stake in Lagardère and 100% of Prisma Media).

Stellantis announced on Tuesday that it plans to invest up to 4.1 billion euros with its Chinese partner CATL in the construction of a large-scale battery plant in Spain.

Air Liquide announces that it has received a 110 million euro grant from the European Innovation Fund for its ENHANCE project, designed to produce and distribute low-carbon, renewable hydrogen derived from ammonia.

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