(BFM Bourse) – The Paris Stock Exchange is falling again this Friday at mid-session, before an important monthly report on private employment in the United States. Rémy Cointreau and Pernod Ricard suffer after a decision from Beijing.
Yesterday’s increase – the first of 2024 – was only a parenthesis in the downward trend on the Paris Stock Exchange. Investors are trying to detect the slightest clue to have visibility regarding the timetable for rate cuts.
However, the latest battery of statistics published on Thursday therefore tempers the high expectations on the pace of reductions in key rates from the main central banks, with the American Federal Reserve and the European Central Bank in the lead.
In France and Germany, inflation has started to rise again, according to the latest data published on Thursday. This trend was also confirmed this Friday morning for all countries in the euro zone. As expected, inflation rebounded to 2.9% year-on-year in December, after 2.4% the previous month, due to rising energy prices. In detail, underlying inflation is down to 3.4% year-on-year while that in services remains at 4% in December.
“The continuation of the rapid decline will reassure the ECB in the idea that it is no longer necessary to raise key rates. But the fact that inflation in services does not fall in December should encourage the ECB to remain patient in its communication about rate cuts”, indicates Bastien Drut, head of Strategy and Economic Studies at CPR AM.
A bearish start to the year
The CAC 40 therefore falls by 1.1%, below 7,400 points to 7,369.02 points this Friday noon. For now, the start of the year is therefore bearish for the flagship Parisian index, which lost 2.31% over the week.
In the United States, it is the robustness of the job market which is taking investors a little by surprise, who are now less confident about a first monetary easing from March. Moreover, the CME’s FedWatch tool now puts the probability of a reduction in federal key rates at 66% in March, while this figure peaked at 84% at the end of 2023.
The statistical highlight of this weekend, the traditional monthly federal report (NFP), like every first Friday of the month at 2:30 p.m. The consensus expects an increase of 0.3% for average hourly wages, 168,000 job creations, and an unemployment rate rising slightly to 3.8% of the active population. Remember that the scope of this report is private non-agricultural employment.
On the bond market side, yields are therefore still rising. The yield on the German 10-year Bund rose to 2.168%, that of the French 10-year rose to 2.71%. In the United States, the interest rate on sovereign debt is now set at 4% at 4.048% before this employment report.
Rémy Cointreau and Pernod Ricard toast
As for increases, only two survivors escaped the decline in the Parisian market: Orange (+0.24%) and Essilorluxottica (+0.07%).
On the other hand, Rémy Cointreau (-12.5%) and Pernod Ricard (-4.8%) are suffering like the Parisian market, 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 (-0.4%) does not benefit from its activity point in the first quarter of its shifted 2023-2024 financial year, although it came out in line with expectations. The collective catering specialist has also confirmed its financial objectives for the entire financial year, namely internal growth in turnover of between 6% and 8% and an operating margin up from 30 to 8%. 40 basis points (0.30 to 0.40 percentage points) at constant rates.
On the foreign exchange market, the euro lost 0.3% to 1.0914 dollars. 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 0.2% to $77.87. A barrel of West Texas Intermediate (WTI), for delivery in February, rose 0.4% to $72.64.
Sabrina Sadgui – ©2024 BFM Bourse