CAC40: directionless like W-Street, rate degradation

( – We are bored on the European markets which have been characterized by stagnation for 48 hours and volumes which are literally collapsing, and in particular in Paris, in proportions unknown in the 21st century.
The CAC40 crumbles by 0.1% with only 1.2 billion euros exchanged in 8 hours (the day after a session where the bar of 1.5 billion euros in real exchanges was barely crossed at 5.30 p.m., the final score after arbitrations s ‘establishing at 2.5 billion euros).
No reaction to the rise in OECD forecasts, which have been revised slightly upwards for the world (from +2.6% to +2.7%), then Europe and the United States (+ 0.1% to 0.9% and 1.6% respectively).
China, which would go from 5.3 to 5.4%, will not reach its target of 5.5% and the outlook remains poor for 2024 with +5.1%.

Wall Street is no more inspired with a Dow Jones at +0.1% while the S&P500 is down by the same amount.
Another highlight, the ‘VIX’ associated with the S&P500 contracted around 14 on Tuesday, a level which not only reflects ‘complacency’ but which also reflects ‘macro’ conditions anticipated as ideal: a bright present and future.
The ‘VIX’ is back above 15 today, for no more reason than its ebb at the beginning of the week: the narrowness of the exchanges makes it possible to move the cursor with very little outlay.

One might think that salvation would come from Asia this morning but Tokyo has completely turned around (-1.8%) after setting a new 30-year record at 33,618 Pts: consumption fell by -4.4% in May (over 12 months).
In Hong Kong, the Hang Seng index ended up 1.7% as investors bet on further stimulus measures in China to support the fragile post-Covid economic recovery.

“Over the next few weeks, the market should remain volatile awaiting clearer indications on future developments,” predicts Gilles Guibout, head of European equities at AXA IM.

“Economic first of all, to understand what could be the impact on the results of companies of the current slowdown”, underlines the strategist.

“Financial then, to see what will be the next decisions of the central banks as to the evolution of their monetary policy, in order to determine what the appropriate valuation multiple should be”, he adds.

While the stock markets are starting to show some signs of fatigue, particularly in the United States where the recent Nasdaq ‘rally’ tends to run out of steam, it seems for the moment very difficult to predict where the next factor of growth.

The markets did not react to the publication of the American trade balance: the deficit widened by +23% in April, reaching 74.6 billion dollars, against 60.6 billion dollars in March ( figure revised from $64.2 billion announced last month), according to the Commerce Department.

This increase in the deficit results from a 3.6% decline in exports of goods and services, to $249 billion, and symmetrically from a 1.5% increase in imports of goods & services, to $323.6 billion .

In France, the trade balance remained at -€9.2 billion in April 2023, as a moving average over three months according to the General Directorate of Customs. Imports and exports both fell by 0.2 MdE and reached 59.3 MdE and 50.1 MdE respectively.

On bonds, yields are deteriorating more sharply tonight: +6pt on OATs at 2.983%, Bunds post +7.5pts at 2.438%, Italian BTPs +6pt at 4.25%.
In New York, T-Bonds also take +7Pt to 3.77% (the Bank of Canada raised its rates to everyone’s surprise) and across the Channel, another bad session with Gilts at +6.5Pts towards 4.2700 %.
Gold logically retreated by -0.5% towards 1.958, the effect of rising rates compensated for the decline in the $ by -0.25% towards 1.0720/E.

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