CAC40: manages to cut losses at the end of the session

(CercleFinance.com) - After holding steady all morning, the Paris stock market suddenly fell -1% at midday, and was down -1.
2% at around 1pm (7,040), following the publication of a CNN headline suggesting that Donald Trump could trigger "a national economic emergency over tariffs".

At the final gong, however, the Paris index limited its losses to -0.49%, at 7452 points.

CNN's news is the exact opposite of an article in the Washington Post on Monday, which had sent the CAC40 and E-Stox50 soaring by +2% because Trump had apparently decided to put some water in his wine and renounce 'universal tariffs' (an article which was denied a few hours later, but which sent the markets into a frenzy).

So it's the opposite of appeasement that's on the horizon, and CNN's article is having the effect of a cold shower. Nevertheless, on Wall Street, investors' reaction to Trump's statements (as well as those concerning the annexation of Panama and Greenland) is that "anything excessive is derisory": Dow Jones, S&P500 and Nasdaq are stable.

This seems almost unhoped-for, given the level of long rates and the yield differential of 350 pts between S&P' stocks and the risk-free yield of treasuries: the first time this has been seen in 23 years.

The day was also rich in statistics from the USA: most recently, new jobless claims in the US fell by 10,000 to 201.000 for the week ending December 30, according to the Labor Department's

Another eagerly-awaited figure 48 hours before the NFP was the result of the ADP survey of private sector job creation: only 122,000 jobs were created in the US in December, slightly below consensus (130,000 according to Jefferies).

The labor market grew at a slower pace in the last month of 2024, with a slowdown in both hiring and wage gains", notes Nela Richardson, chief economist at ADP.

In Europe, the figures are far more worrying, with industrial orders falling by -5.4% in November in Germany, according to Destatis.

In the EU, the Economic Sentiment Indicator (ESI) fell by -1.7 points to 94.5, and in the Eurozone by -1.9 points to 93.7, according to the results of the European Commission's monthly survey.

The Employment Expectations Indicator (EEI) also fell in both zones (-1 point to 98.4 in the EU, -1.4 point to 97.3 in the Eurozone), with both indices below their long-term average of 100.

In France, the trade balance improved again in November, according to CVS-CJO data from the customs administration, with the deficit falling to 7.08 billion euros from 7.52 billion the previous month.

This month-on-month reduction is the result of a 2.9% rise in French exports to 50.1 billion euros, while imports rose by only 1.7% to almost 57.2 billion.
The markets are now awaiting the 'minutes', published at 8pm, of the Fed's December 17-18 meeting, at the end of which the central bank cut rates by a quarter, and will be closely watched by investors.

The document should reveal more about the evolution of debates within the FOMC, the institution's monetary policy committee, as well as the future trajectory of its rate cuts.

The market is caught between contradictory discourses. While Fed Chairman Jerome Powell is advocating caution and the entry into a "new phase" marked by fewer easing measures (2 rate cuts), other members have been a little more accommodating, suggesting 3 rate cuts as anticipated in November.

For the time being, traders are not anticipating another rate cut before June, before a second by the end of the year, but the 'minutes' could shed new light on the Fed's intentions, and even rekindle speculation of three rate cuts by 2025.

The dollar remains strong (+0.35% against the euro at 1.0300) and has broken a new annual record at $1.027/E.

In the news for French companies, Trigano reported a 17.4% drop in sales to 769.8 million euros for its first quarter 2024-25 ended November 31 (-18% on a like-for-like basis), compared with the same period a year earlier.

Solutions30 reports that it has strengthened its presence in Poland in the fast-growing Electric Vehicle Charging Infrastructure (EVRI) market, signing two contracts with key players in the country.

Lastly, Vallourec announces that it has achieved, a year ahead of schedule, its objective of zero net debt, having reduced its net debt by just over 240 million euros in the fourth quarter of 2024, its ninth consecutive quarter of deleveraging.

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