CAC40: stable as we await US employment report

(CercleFinance.com) - The Paris stock market was broadly stable this morning at around 7495 points, driven by Capgemini (+2.
1%) and Bureau Veritas (+1.2%), but penalized by Pernod Ricard (-1.3%) and Renault (-0.8%).

The markets took note of several statistics concerning France. In November 2024, French household spending on goods rebounded by 0.3% in volume over one month (after -0.3% in October, revised from an initial estimate of -0.4%), according to Insee.

On the other hand, in November 2024, production in France increased slightly over one month in the manufacturing industry (+0.2%, after -0.1% in October) as in total industry (+0.2% after -0.3%), according to Insee.

Nevertheless, the market is likely to remain relatively subdued as it awaits the release of the Labor Department's employment report at 2.30pm, a statistic likely to have a decisive impact on the Fed's future monetary policy decisions.

Economists are forecasting an average of 170,000 new nonfarm payrolls in December, compared with 227,000 in November, with the unemployment rate remaining stable at 4.2%.

Investors are hoping that these figures will confirm the recent deceleration in the labor market and bolster the scenario of further rate cuts by the Fed this year.

The various statistics published ahead of the employment report (ADP, employment component of ISM surveys) showed that hiring momentum was weakening in the US.

The fact that the labor market is less and less tight will enable FOMC members to keep in mind the need to gradually converge towards greater monetary neutrality, and therefore to continue cutting rates", explains Bastien Drut, Head of Strategy and Economic Research at CPR AM.

"Nevertheless, with disinflation stalling and uncertainty over the Trump administration's policies, the Fed will take its time", adds the analyst.

Furthermore, the news of the last few hours does not encourage much risk-taking, whether it be Donald Trump's very offensive speech on trade issues or the surge in UK bond yields.

After a particularly favorable 2024 vintage, especially for US equities, the risk of a stock market correction has increased at the start of 2025, warns Goldman Sachs.

According to the American bank, the probability of a stock market decline of at least 10% within three months and more than 20% within 12 months is now close to 30%, whereas it was still relatively low in the 4th quarter of 2024.

Over the week as a whole, the CAC is currently up by just over 2.8%, after three out of four sessions ended in the green.

On the bond market, the crisis situation persists in the UK, even though the yield on ten-year Gilts is back to 4.81% after peaking at 4.98% yesterday, not far from the critical 5% threshold.

The rate at which the country is incurring debt remains at its highest level since the 2008 financial crisis.

On the currency front, the euro continued to fall against the dollar, below the 1.03 mark, but the single currency could regain ground if US employment figures turn out better than expected.

The oil market is heading for a third consecutive week of gains, buoyed by rising demand despite fears of an economic slowdown and uncertainties over interest rate trends.

Brent crude gained 1.5% to almost $78.3 a barrel.

In French company news, Unibail-Rodamco-Westfield announced on Friday that it had sold a 25% stake in its Centrum Cerny Most shopping center in Prague to Upvest and RSJ Investments.

Engie announces the extension of its flagship wind farm project on the shores of the Gulf of Suez, in Ras Ghareb, Egypt, currently under construction, which will bring the total capacity of this wind farm from 500 MW to 650 MW.

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