CAC40: +1.3%, resolutely rising towards its records

( – After 3 sessions of decline, the Paris stock market is reaccelerating (+1.3%) and the CAC40, which has recrossed 7,200 in force, is approaching its zenith last Friday.
The CAC 40 ‘GR’ crosses 21,200 again and is once again in absolute record territory, 1% above the 21,000 of January 5, 2022.
The CAC is driven by Legrand (+6.5%) and Crédit Agricole (+5.5%) which published their results in the morning (see below).
The Euro-Stoxx50 climbed by +1.3% to 4,265 in the wake of Amsterdam which soared by +1.6%.
From the first exchanges, it became clear that the Nasdaq’s fall of -1.8% on Wednesday evening had no impact and that the common thread was the upturn that was taking shape on the bond markets, with OATs and Bunds wiping out -7pts base.

In addition, the rather reassuring inflation figures in Germany seem to have taken over the concerns surrounding the evolution of monetary policies.

Consumer price inflation in Germany accelerated slightly over one year, to 8.7% in January against 8.6% in December, according to an initial estimate published this morning by Destatis, but economists expected a sharper acceleration, around 8.9% (always this string of ‘less worse than expected’ when the figures are still not good).

However, Commerzbank clarifies that ‘the national CPI has moved to a new base year and it is therefore not yet possible to say whether inflation has risen or fallen’.

In the United States, jobless claims in the United States increased by 13,000 during the week of January 30, standing at 196,000 against 183,000 the previous week, according to the Labor Department.

Elsewhere, the four-week moving average – seen as a better indicator of the underlying trend in the job market – shows a decline of 2,500 week-on-week to 189,750.
Finally, the number of people regularly receiving benefits increased by 38,000 to reach 1,688,000 during the week of January 23, the last week available for this statistic.

The T-Bonds relax by -5.6Pts towards 3.5800% but the ‘6 months’ only erases -1.5Pt at 4.901% and the ‘1 year’ -1.8Pt at 4.852%, which demonstrates that expectations lean in favor of rates going beyond 5.25% while US growth would suffer by 2024.
While the earnings season has been rather disappointing so far in the United States, investors are on the lookout for any statement from their leaders regarding the outlook for activity in 2023.

On Wednesday, the Fed Chairman said he would not rule out accelerating the pace of Federal Reserve rate hikes if strong economic indicators warrant.

His remarks, which follow the latest jobs report which showed that the labor market remained under pressure, as did wages and inflation, immediately influenced rate expectations.
John Williams, the head of the FED in New York, closest to Wall Street, has made even firmer remarks concerning the fight against inflation and the final target for key rates… and he is closing the door to rate cuts before 2024, a scenario investors refuse to believe.
According to the CME Group’s FedWatch barometer, the estimated probability of a 50 basis point rate hike after the March meeting, rather than 25 points, fell from 0% to 9% less a week, and a rise of 25Pts in May now receives 60% of the vote.

“There is a growing divergence between the ‘hawkish’ outlook of central banks and the more ‘dovish’ outlook of the markets”, worry the Neuberger Berman teams.

“Policymakers insist they will ‘stay the course’, while markets believe they will ‘change direction’,” the management company said.

In corporate news, Legrand announces net income group share up 10.5% to €1 billion for 2022, with an adjusted operating margin before acquisitions of 20.7% of revenue , up 0.2 points compared to 2021.

Crédit Agricole SA presents for the year 2022, a net income group share of 5.44 billion euros, i.e. a decrease of 7% in published data, but an increase of 1.3% in underlying data (i.e. excluding specific items).

Unibail-Rodamco-Westfield publishes adjusted net recurring earnings per share (RNRPAA) of 9.31 euros for 2022, up 34.7%, ‘thanks to the performance of the shopping center activity and the sharp rebound in the congress and exhibition activity’… but the group will not distribute dividends for the 2022 financial year.

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