(BFM Bourse) – The statistical highlight of this weekend, the latest monthly American employment report, will have confused the markets. Over the week, the flagship Parisian index conceded 1.6%.
For the first week of the year, investors would have preferred a better start for the CAC 40. The flagship Parisian index ended down 0.4%, at 7,420.69 points on Friday evening, to show a decline of 1. 62% over the whole of a week rich in economic indicators. This is the first weekly decline in two months.
The weekly decline would have been more pronounced if trading had been interrupted before 3:30 p.m. The CAC 40 in fact lost more than 1% after the publication of a monthly report which confirmed the robustness of the American job market which revived fears of seeing the American Federal Reserve postpone its schedule of rate cuts.
A confusing report
The American economy therefore created more jobs than expected in December. Some 216,000 hires were recorded by the American Department of Labor compared to 170,000 expected. The unemployment rate remained stable at 3.7% in December, where a slight rise to 3.8% was expected by the market. But as for the average salary, it is also up 0.4% over one month, while the consensus expected a slight slowdown to +0.3%.
“Friday’s U.S. jobs report and general strength in U.S. economic data have helped deflate these (rate) expectations, raising doubts about the timing and magnitude of the first U.S. rate cut. While they almost certainly expected a decline in March, traders have now reduced those expectations to around 50%, while the number of 25 basis point declines this year has increased from more from six to almost five,” adds Ole S. Hansen of Saxo Bank. But job creations for October and November were revised downwards, by around 70,000 units.
“If we dig a little deeper, job creation was revised downwards in October and November,” erasing the gap with expectations in January, Nathalie Benatia, economist at BNP Paribas AM, explains to AFP.
“Like every month, the employment report brings its share of oddities… The difference between household and business surveys is enormous. The number of people saying they are employed full-time is dropping very sharply (more than a million and a half! ). It is difficult to extract the signal from the noise in this report on employment but it seems very unlikely that it will change the situation for the Fed”, underlines Bastien Drut, head of Strategy and Economic Studies at CPR AM.
In the wake of this report, the yield on the 10-year US Treasury bond rose to 4.07% before falling below the 4% threshold at the close of European markets. An indicator showing a slowdown in the services sector , has indeed brought its share of contradictory signals on the health of the American economy. The services ISM came out at 50.6 in December compared to the consensus 52 and after 52.7 in November. As a reminder, 50 marks the threshold which separates the contraction of activity from its expansion.
In Europe, the 10-year German Bund rate is trading at 2.139% and 2.679% for the yield on French debt of the same maturity, after a peak at 2.18% and 2.73% respectively after the publication of the report of American employment. A little earlier today, operators took note of a rebound in inflation to 2.9% over one year, in the euro zone for the month of December, after 2.4% the previous month, in due to rising energy prices.
Rémy Cointreau and Pernod Ricard toast
Rémy Cointreau (-12%) and Pernod Ricard (-3.6%) clearly suffered this Friday, penalized by China’s decision to launch an investigation into liquor products from the European Union. To a lesser extent, LVMH fell by 1.9%.
Sodexo recovered, and ended up 0.7%, after a point of activity in the first quarter of its delayed 2023-2024 financial year in line with its expectations. The collective catering specialist has confirmed its financial objectives for the entire financial year, namely internal growth in turnover of between 6% and 8% and an operating margin up 30 to 40 points. base (0.30 to 0.40 percentage points) at constant rates.
On the foreign exchange market, the euro increased by 0.1% to 1.0960 dollars after the statistics published across the Atlantic. As for oil prices, they remain on an upward trend with the escalation of tensions in the Near and Middle East. A barrel of Brent from the North Sea, for delivery in March, rose another 1.7% to $78.99. A barrel of West Texas Intermediate (WTI), for delivery in February, rose 2.4% to $73.89.
Sabrina Sadgui – ©2024 BFM Bourse