CAC40: a deluge of records to celebrate the end of the 1st quarter

(CercleFinance.com) - The scenario was a foregone conclusion, but it has been masterfully executed: the CAC40 is heading for an intraday record/closing record double on the eve of the end of the calendar month, which will end, as tradition dictates, at the highest point of the (shortened) week, quarter and history.

The CAC has just reached 8,230, while the CAC40 'GR' has just passed the symbolic 25,000-point mark (at 24,960, up 9% since January 1).

The CAC40 is not alone in breaking records: the Euro-Stoxx50 is flirting with 5,100, the DAX40 (+0.6%) has smashed the 18,500 mark... and on Wall Street, the Nasdaq is back on track for a better close (just 0.5% short), as is the S&P500 at 5,225 (very close to 5,240).
Goldman Sachs raised its target for the STOXX Europe 600 index by 6% on Monday, on the back of re-accelerating growth and monetary easing, which still points to a potential 6% rise over 12 months.

In addition to the 8250-point mark, which remains the current hurdle, the CAC could thus head for the psychological 8500-point threshold, before tackling the 8700-point resistance zone in the longer term.

Investors are trying to push everything to the top before the Easter weekend, when the Paris market closes for Good Friday and Easter Monday.

The recent highs recorded by stock markets around the world have pushed already high valuations to stretched levels, according to some investment strategists.

Most of the performance of equity markets since the beginning of the year, and even over the last 18 months, has been due to the expansion of valuation multiples", emphasize JPMorgan's teams.

At global level, 12-month forward earnings have risen by only 7% from their lows, while the price/earnings ratio (P/E) has risen by almost 30%", stresses the US bank.

At 21.4x expected earnings, the P/E of US equities is up 6% year-on-year, 20% since October 2023 and 30% since October 2022, notes JPMorgan.

In Europe, European P/E ratios are at similar levels, says the New York-based firm, albeit from a much lower starting point.

These high valuations risk preventing further upside and condemning markets to stagnation if they are not accompanied by earnings growth, warn strategists.

'Our concern is that earnings growth will prove disappointing', warns JPMorgan.

Investors now seem to be waiting for further signs of economic health and confirmation that inflation is easing, before continuing the upward movement that has been underway since the autumn.

With this in mind, the markets will turn their attention on Friday to US household income and spending statistics, which will be accompanied by the 'PCE' component of prices, the Fed's preferred measure of inflation.
In the meantime, "macro" news is keeping a low profile on Wednesday: according to data published by the US Energy Information Administration (EIA), US crude oil inventories stood at 448.2 million barrels for the week ending March 18, up 3.2 million barrels on the previous week's level.

In detail, inventories of distillate products - including heating oil - fell by 1.2 million barrels, while gasoline stocks rose by 1.3 million barrels, again compared with the previous week, continues the agency.

Finally, the EIA points out that refineries operated at 88.7% of their operational capacity during the same week, with average production of 9.2 million barrels/day.
On the bond front, the session proved favorable for T-Bonds with -2.5pts to 4.2080%, Bunds eased by -4.4pts to 2.2980%, our OATs by -4.7pts to 2.7850% (same spread for Italian BTPs at 3.1300%.
The Euro loses a few fractions against the Dollar (-0.15% to 1.0815.
No reaction from oil to the IEA figures: the barrel of 'WTI' loses nothing, as does 'Brent' ($86.1 in London).

In French company news, composite fabric manufacturer SergeFerrari Group reports net income, group share (RNPG) for 2023 of 4.7 million euros, compared with 15.5 million in 2022, as well as REBIT of 11.3 million, compared with 26.5 million the previous year.

After an initial sale of Nissan shares last December, Renault Group announces a second operation with the intention of selling up to 100.242,900 Nissan shares, representing around 2.5% of the Japanese company's share capital.

Finally, OVHcloud announced on Wednesday the establishment of a strategic partnership with OneNeck IT Solutions, with the aim of offering services to their joint customer base, initially in the United States.

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