CAC40: losses trimmed, rates remain at their zenith

(CercleFinance.com) - The Paris stock market's fall has been trimmed by 40% (from -1.
6% to -1% around 8,010): losses widened with the publication of GDP and the PCE index, while the Euro-Stoxx50 fell by -1.1% to 4,930.930.

Wall Street reopened sharply lower and looks set to record its second worst session of the year since April 15, with the Dow Jones at -1.6%, the S&P500 at -1.3% and the Nasdaq at -1.8%.

All the figures published at 2:30 p.m. belied expectations and dampened Wall Street and the bond markets.

US GDP figures for the first quarter, published on Thursday by the US Department of Commerce, came out at the opposite end of the spectrum from the consensus: only +1.6% instead of the median estimate of +2.8%, Goldman Sachs having just raised its forecast to +3.2% (GDP coming out half as high).
But it gets worse: underlying PCE inflation is said to have reached 3.7%, against the 3.4% expected by analysts.

10-year yields jumped by +5pts to 4.705%, the highest since the end of November, while the 2-year yield, also with +6pts, happily broke the 5% barrier at 5.002%, with the '30-year' posting +6pts at 4.844%.
To this must be added unemployment registrations, down from 215,000 expected.
mage below expectations at 207,000 vs. 212.000 the previous week
And it's not just the USA that's disappointing, as this morning investors learned of a deterioration in the business climate in France between March and April, with INSEE's synthetic indicator dropping one point to 99, and thus falling back to just below its long-term average (100).

This deterioration is the result of the less favorable economic situation in all sectors of activity, with the exception of retail trade. The manufacturing and services indices both fell by three points to 100.

Our OATs are not easing, however (+2.5pts to 3.114%), severely impacted by US rates, Bunds are no better off, with +4pts to 2.624%, while Italian BTPs are +4pts to 4.00%.

On the quarterly front, the disappointing forecasts of Meta Platforms (-13%) weighed on the trend and compromised the recent resurgence of optimism that had surrounded the technology compartment

The parent company of Facebook and Instagram published online quarterly results on Wednesday evening, but unveiled lower-than-expected forecasts, causing its share price to plunge 16% in electronic trading.
The heavyweights Alphabet (-4%) and Microsoft (-4.3%) will publish their financial statements later this evening.
The dollar is weakened by this series of stats, despite the surge in interest rates: -0.1% against the euro, which is back up to 1.0705.
Oil is proving resilient, giving up just -0.5% to $87.6 on Brent crude, while WTI is moving in the same direction, with -0.5% to $82.5 on the NYMEX.

The stock market was also buoyed by numerous earnings releases in Paris and the rest of Europe, with announcements from leading groups such as Hermès, Pernod Ricard, Sanofi, Schneider and Unilever.

In addition to the concerns raised by Meta's disappointing outlook, STMicroelectronics posted a mediocre performance this morning, reporting weaker-than-expected figures for the quarter and forecasting a 26% drop in second-quarter sales.

Hermès International, meanwhile, reported sales of 3.8 billion euros for the first quarter of 2024, up 17% at constant exchange rates (CER) and 13% overall, 'with solid activity in all geographic zones'.

Dassault Systèmes reports first-quarter 2024 non-IFRS EPS up 12% to 0.30 euro at constant exchange rates, with a non-IFRS operating margin of 31.1%, up 50 basis points at constant exchange rates and ahead of target.

Pernod Ricard posted third-quarter 2023-24 sales of 2.35 billion euros, down 2% on a reported basis and stable on an organic basis (+2% excluding Russia), with volumes up by around 1% after four consecutive quarters of decline.

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