(CercleFinance.com) – The Paris stock exchange (+0.9%) will try to win a double challenge by 5:35 p.m.: to finish above 7,376 Pts (closing record of January 5, 2022) after having established a new absolute zenith at 7.387 around 11:33 a.m.
Even if the closing did not live up to expectations, the CAC40 will have broken an absolute record on the eve of the ‘3 witches’ session.
Barring an improbable accident, the CAC should align a 7th week of increase and bring to 20 weeks the recovery movement started at the end of September.
The CAC has posted a gain of +14% since January 1 and +30.5% since September 29.
For its part, the CAC40 ‘GR’ peaked at 21,700 (i.e. 250Pts better than the day before, and 600Pts better than 5/1/2022).
The CAC40 is driven by Orange (+7%) and Airbus (+4.5%) which published their results this morning (see below).
The Euro-Stoxx50 also broke a record but just annual at 4.316 while the DAX climbed towards 15.634 (also its 2023 zenith)… but these 2 indices fell back to +0.4% and +0.2% respectively while Wall Street remains in the red with a Dow Jones at -0.6%, an S&P500 and a Nasdaq at -0.5% (the Nasdaq lost -1.3% shortly after the opening, its recovery is considered encouraging ).
The apparent mid-day euphoria in Europe was somewhat dampened by a flurry of macroeconomic indicators in the United States, of which 3 out of 4 appear more robust than expected: ‘good news’ becomes bad news in the outlook a subsequent rate cut… which would therefore be postponed for several months.
Producer prices increased by +0.7% in January in the United States (against +0.4% expected), mainly in the wake of the rebound in energy costs.
The Labor Department reported on Thursday that the ‘PPI’ rose +6% year-on-year to the end of January, on the heels of energy prices which climbed 5.4% in January after a 10-month drop, 3% in December.
Excluding core data, excluding food, energy and commercial services, producer prices rose 0.6% in January, their strongest rate of increase since March 2022.
Over 12 months, the increase is 4.5% instead of the 4.3% expected.
Conclusion: the fall in prices (-0.2% in December) marks a halt and this could lead to a review of the scenario of a continuous fall in 2023.
Jobless claims in the United States fell -1,000 in the week of February 6, settling at 194,000 against 195,000 the previous week (figure revised from 196,000), according to the Labor Department , while a rise towards 200,000 was expected.
Small downside to the picture of a US economy on the verge of overheating: the Commerce Department reports a 4.5% decline in housing starts in the United States last month, to 1,309,000 in rhythm annualized, a level below economists’ expectations.
Building permits for American housing – supposed to prefigure future housing starts – remained stable (+0.1%) at an annualized rate of 1,339,000 in January, thus slightly missing the market consensus: it seems illusory to wait for a real trend reversal as US long rates start to climb again (+4 Pts to 3.894% on the ’30-year’).
These statistics will not reassure Wall Street in terms of rate management by the Federal Reserve, resulting in the strength of the dollar (1.0675/E, or +0.1%) and a recovery in bond yields.
The inversion of the US yield curve remains impressive since the ‘6 months’ and the ‘1 year’ have tested 5.0300% and 5.0200% respectively this afternoon.
The yield on 10-year US Treasury bonds takes +3Pts to 3.8380% and this leads to a deterioration in Europe with OATs at 2.95% (against 2.944% on Wednesday and 2.99% at the highest green 3:45 p.m.) and Bunds at 2.4900% (against 2.474%)… and Italian BTPs add +6pts to 3.3900%.
In corporate news, Orange unveils net income for 2022 of 2.62 billion euros, compared to 778 million in 2021, and organic cash flow from telecom activities up 27.4% to 3.06 billion , in line with its target of at least 2.9 billion.
Pernod Ricard publishes net income group share up 29% to €1.79 billion for its first half of 2022-23, mainly reflecting an increase in current operating income (+12% in terms of organic growth) at 2.42 billion.
Renault Group is claiming a significant improvement in its profitability for 2022, with net income from continuing operations at 1.6 billion euros, up 1.1 billion, and an automotive operating margin at 3.3%.
Finally, Airbus unveiled a net profit up 6% to 1.68 billion euros over the last three months of the year, for a turnover up 21% to 20.64 billion euros .
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