CAC40: settles above 7,600 in the wake of luxury goods

(CercleFinance.com) - The Paris Bourse's lead narrowed slightly (to +1.
8% nonetheless), and the CAC40, which flirted with 7,610, recorded its best intraday performance for a quarter (equaling the +2.3% of September 26, 2024).
Above all, for once, Paris outperformed the other European markets by several lengths, benefiting from the surge in the luxury goods sector with +7.5% for LVMH, +5% for Kering and +4% for Hermès.
By midday, these 3 giants were even up by an average of +8%, one of the decade's leading "performances"!

This morning, Richemont's record results, with nine-month sales of 16.2 billion euros, up by 3% (+4% at constant exchange rates), revived hopes of a recovery in the luxury sector.

The CAC40 is the driving force behind the E-Stoxx50 (+1.2%), which would be close to zero (as would the DAX at +0.2%) without our luxury stars.

On Wall Street, as expected, US indices got off to a cautious start, with zero scores for the S&P500 and Nasdaq and a -0.2% decline for the Dow Jones.

On the statistics front, a very busy day in the USA: US retail sales rose by 0.4% in December, according to the Commerce Department.
This is 2 times less than the +0.8% sequential increase in November (revised from +0.7% initially announced),

Excluding the sometimes volatile automotive sector (vehicles and equipment), US retail sales also rose by 0.4% last month, whereas Bank of America was expecting a 0.6% increase.
On the employment front, the Labor Department reported 217,000 new jobless claims in the US in the week to January 6, up 14,000 on the previous week.
But activity in the manufacturing sector is recovering vigorously (with a historic rise in the 'Philly-FED', the strongest since June 2020) in the Philadelphia region, according to the index calculated by the local Fed, which rises from a revised reading of -10.9 in December to +44.3 in January, its highest level since April 2021.

Among the components of the overall index, the new orders (+47 points to 42.9) and current shipments (+39 points to 41) indices are once again advancing strongly, reaching their highest levels since November 2021 and October 2020 respectively.

On the inflation front, import prices rose by 0.1% in December for the third consecutive month, a figure which shows that inflationary pressures now seem to be better under control in the USA... but beware, the devil is in the detail.

The Labor Department points out that import prices have not risen by more than 0.1% since April 2024.

Energy prices nevertheless rose by 1.4% last month, driven by higher oil and natural gas costs, their biggest increase since last April.

The rise in food and beverage prices also accelerated in December, to 2.8% from 1.4% in November.
On an annualized basis, i.e. over a sliding 12-month period, import prices posted a 2.2% gain, their strongest since December 2022.

In Europe, the inflation rate in Germany, as measured by the retail price index harmonized to European standards (HICP), was confirmed at 2.8% year-on-year in December, announced Destatis, the Federal Statistics Office, on Thursday.

There was little reaction to the publication of the minutes of the December 12 meeting of the Governing Council of the European Central Bank (ECB), which resulted in a fourth rate cut in the space of six months.

The institution's President, Christine Lagarde, expressed concern at the downside risks to eurozone growth.
After their sharp fall of -10pts on average the previous day, the bond markets are trying to find a new equilibrium: 10-year T-Bonds are stabilizing at 4.655% and the 30-year is up +1pt at 4.888%, our OATs are up +2pts at 3.3680%, Bunds are also up +2pts at 2.547% (i.e. an unchanged spread of 82 basis points), Italian BTPs are up +0.5pts at 3.692%.

While the latest US inflation figures are reassuring, investors may prefer to remain on the defensive as they await Donald Trump's inauguration, scheduled for Monday.

At the beginning of the week, the teams at Cogefi, a Paris-based portfolio management company, warned that 'it is likely that the 2025 stock market year will begin in earnest on January 20'.

Crude oil prices soared yesterday, with a barrel of US light crude trading just above $80 for the first time since last summer.
A barrel of Brent crude gave up almost 1%, around $81.6 after testing $82.5 yesterday, for the first time since July 25 and August 12, 2024.

Gold is also waking up to the fall in rates, and is back above $2,700/Oz, up 2% in 24 hours to $2,719.

Finally, the Euro is down -0.05% to 1.0285 against the Dollar.

In French company news, Alstom reports that it has signed a new agreement with Metrolinx for the overhaul and modernization of 181 double-deck suburban train cars for GO Transit, the public transport service of the Greater Golden Horseshoe region in Canada.
TotalEnergies announced that its European refining margin indicator had recovered to $25.9 per tonne in the fourth quarter of 2024, compared with $15.4 in the third quarter, an increase that should be reflected in downstream results and cash flow.

Finally, Stellantis reported on Thursday a 9% drop in vehicle deliveries in Q4 2024, mainly due to North America, where the automotive group is struggling to clear its inventories.

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