CAC40: advances erode like W-Street, rates climb

(CercleFinance.com) - The Paris stock market reduced its advance to +0.
4% around 7,435 points, still supported by the banks (+2.3% on average), Michelin (+2.3%) and the automotive sector.

After a trendless session, Wall Street opted for a cautious rise, with +0.4% for the Dow, +0.3% for the S&P500 and the Nasdaq (-0.4% the previous day) posting +0.9% around 3:35 pm (a disappointment).
However, things are not getting any better on the US long yield front, with new "highs" (the "10 yr" posted +2pts to 4.80%, the "30 yr" +1.5pts to 4.9920%.
The Labor Department reports that US producer prices rose by 0.2% in December compared with the previous month, and by 0.1% excluding food, energy and commercial services (in line with the most optimistic forecasts).
Expressed as an annual variation, the rise in producer prices accelerated last month compared to November (+0.3 points to 3.3%) in unadjusted data, but slowed (-0.2 points to 3.3%) excluding food, energy and commercial services (a score of +3.5% was expected).
Watch out now for oil prices, with Brent attacking the $81 resistance level (WTI unsuccessfully testing $78 and falling back towards $77).

Investors may seek reassurance from reports circulating across the Atlantic that Trump's teams are preparing a "progressive taxation plan" for tariffs.

This issue has preoccupied the markets since the election of the Republican, raising fears of the return of a trade war that would impact European exporters, among others.

While we wait to find out more - Trump will be inaugurated on January 20 - the markets will take note tomorrow of US consumer price figures, which could provide clues as to the Fed's interest rate trajectory.

Retail sales for December, expected on Thursday, will also shed interesting light on the current state of the economy across the Atlantic.

If one-year core inflation exceeds the consensus of 3.3% and retail sales grow less than the 0.6% the market is hoping for, expectations of a slowdown in Fed rate cuts will strengthen, which would support the dollar and push the yield on ten-year Treasuries above the 4.80% mark", warns Michael Brown, strategist at Pepperstone.

In Europe, there were no major figures, but nothing good on the rates front: ten-year Bunds gained +3pts to 2.622%, while French OATs added +1.6pts to 3.4730, reducing the France/Germany spread to 85pts.

In foreign exchange, the euro stagnated against the greenback at around $1.0260/E.

In French company news, Renault Group announced the signing of a framework agreement between its Mobilize brand and Free To X, Autostrade per l'Italia's fast-charging subsidiary, to develop fast-charging infrastructures in Italy.

On Tuesday, Worldline announced that it had extended its existing partnership with Belgian banking group KBC, to which it will continue to supply its card-issuing services.

Finally, Quadient reports that it has been selected by a US government agency to modernize its mail automation infrastructure under a contract worth around $1.6 million.

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