CAC40: frozen at 7.360, rates deteriorate, E/$ stable at 1.05

(CercleFinance.com) - The Paris Bourse is at a complete standstill, with the CAC40 unchanged at 7,365 in slightly higher volumes than on Monday and Tuesday.
.. but this does not reflect very intense balance sheet dressing operations.

The chips seem to be down in the United States too, where indexes have gained 30% on average this year, and the latest statistics don't make much difference, as the US Federal Reserve's decision to cut the interest rate by 25 basis points is now a foregone conclusion (the last major event of the year on the financial markets).
On Tuesday, the Dow Jones (-0.6%) posted its ninth consecutive session of declines, the first since 1978 and 1945.
The Dow is the victim of a "sector rotation" which continues to favour the major technology stocks, against the backdrop of the AI explosion. The Nasdaq set new all-time highs before ending the year down 0.3%.

The main event at the end of the year, the Fed will issue a statement this evening at 8:00 p.m. (Paris time) at the end of a two-day meeting of the FOMC, its monetary policy committee.
This will be followed half an hour later by a press conference by its Chairman, Jerome Powell.
Investors will study the growth, inflation and rate forecasts of central bank officials in an attempt to fine-tune their expectations for the months ahead.

We think that Powell will try to adopt a neutral tone in his speech, but it is likely that his words will pave the way for a slowdown in rate cuts", predicts Danske Bank.

Yesterday's publication of solid consumer figures in the USA confirmed this scenario.

After last week's inflation figures, the fact that retail sales came in above expectations for the sixth month in a row is another reason for the Fed to be more cautious in its rate-cutting cycle", says Bastien Drut, economist at CPR AM.

While waiting for the Fed's verdict, at 2:30 pm market participants discovered the figures for housing starts and building permits in the USA.
According to data published by the Commerce Department, building permits jumped by 6.1% last month on a seasonally-adjusted basis, to an annualized rate of 1.50 million, compared with 1.42 million in October.
Compared with November 2023, building permits were down an insignificant 0.1%.
The number of housing starts fell by 1.8% to an annualized rate of 1.29 million, for a year-on-year decline of 14.6%.

In France, Moody's announced last night that it had downgraded the debt of seven major French banks, including BNP Paribas and Crédit Agricole, following the downgrading of France's sovereign rating last Friday.

Eurozone government bond yields deteriorated by +2 to +2.5pts: French OATs stood at 3.062%, Bunds at 2.2530%, pushing the spread with Germany up to 81 points.

The US 10-year rebounded by +4pts from 4.38% to 4.425%, the 30-year by +3.5pts to 4.515%.

The euro confirmed its current good form, returning to around 1.0510 against the dollar despite economic indicators reinforcing the scenario of a slowdown in Fed rate cuts.

The oil market rallied slightly ahead of this afternoon's release of U.S. crude inventories: Brent crude advanced by 0.2% above $73.3 a barrel, while West Texas Intermediate (WTI) gained almost 0.3% near $70.3.

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