CAC40: limited decline despite pressure on interest rates

(CercleFinance.com) - The Paris Bourse ended the first session of the week with a limited decline of 0.
3% to 7,408 points, finally recovering slightly after losing up to 1% in the morning, but still penalized by URW (-3.3%) and STMicro (-2.6%).

US indices reopened lower, but not as strongly as initially expected: the downturn was limited to -0.5% on the S&P500 and -1.4% on the Nasdaq, while the Dow Jones gained +0.4%.

Wall Street seems to have lost interest in the continuing rise in interest rates: the '10-year' US T-Bonds (+1Pt) peaked at 4.785%, while the '30-year' (+1.5Pt) oscillated between 4.9700 and 4.978%, a curse for the real estate sector.

In another sign of nervousness, the 'VIX' soared +5% to over 20.

Wall Street is gearing up for a decisive week, marked by the publication of quarterly results by several heavyweights in the US economy, which will set the tone for the sessions to come.

The major US banks will be in the spotlight in the first week of the earnings season, with Citi, Goldman Sachs, JPMorgan and Wells Fargo scheduled for Wednesday, followed by Bank of America and Morgan Stanley the next day.

According to FactSet, profits for US companies in the S&P 500 index should have risen by an average of 11.7% year-on-year in Q4, their biggest increase since the end of 2021... but this average masks colossal disparities, with 70% of profits concentrated in a dozen companies, while most of the companies in the 'S&P480' (the S&P500 minus the 20 titans of the stock market with over $500 billion in 'capi') will post 'on average' declining results over 12 months.

As we saw last Friday with the solid US employment figures, good statistics are no longer enough to push the market higher, as they are synonymous with less monetary easing.

The results "season" will therefore determine whether the New York Stock Exchange can regain upward momentum, bearing in mind that the S&P 500 is currently trading at 21.5 times earnings, well above its ten-year historical average (18.2).

The reopening of the results season will not, however, completely overshadow what is currently at stake on the other side of the Atlantic, between uncertainties over Donald Trump's future policies, the reawakening of inflation and tensions over bond yields.

The results season also begins in a climate of growing trade uncertainty, a week ahead of the inauguration of Donald Trump, who will officially become the 47th President of the United States next Monday.

During his campaign, he stated his intention to tax Chinese goods by up to 60% and goods from other countries by 10%-20%.

The implementation of long-lasting 'universal' (10/20%) tariffs would be a negative factor for equities, especially for retailers, carmakers, technology companies, semiconductor manufacturers and certain industrial groups... not to mention the impact on final prices paid by consumers.

In view of these uncertainties, and valuations that have become less attractive, investors are wondering whether the time has not come to take profits on US stocks, worried that a major correction could occur in the months ahead.

In a note published last week, Goldman Sachs strategists put at 30% the probability of a fall in world stock markets of at least 10% within three months, and more than 20% within 12 months.

Against this backdrop, gold is consolidating by -0.9% towards $2,665, after returning last Friday to levels close to its all-time highs reached over 2 months ago.
However, the dollar is proving firm, setting a new annual zenith against the euro, which has retreated to around 1.0180 and is now losing -0.3% to 1.02$/E.

The general tension in interest rates (+2.7Pts on our OATs to 3.45%, +1.5Pt on Bunds to 2.5830%) is beginning to have a heavy impact on cryptos, with -3% on Bitcoin (below $92.000), -7% on Solana and Ethereum (towards $3,020) -10% on Cardano (and over 1 week, Solana falls by -20%, Ethereum by -18%).

Oil prices confirm their upward trend, as the Biden administration decided on Friday to impose new sanctions on the Russian energy sector.

Brent still gains nearly 1.6% to $81 a barrel, WTI +1.1% to $76.7.

In French company news, bioMérieux announces an agreement to acquire SpinChip Diagnostics, a Norwegian company in which the French in vitro diagnostics specialist has held a 20% minority stake since March 2024.

Sanofi reports that the Chinese NMPA has approved its Sarclisa, in combination with pomalidomide and dexamethasone (Pd regimen) for the treatment of relapsed or refractory multiple myeloma in adults who have received at least one prior treatment.

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