(CercleFinance.com) – The Paris Stock Exchange (+0.62%) saw its lead melt away in the wake of Wall Street, which saw its initial gains (+0.5%) completely evaporate, with the US indices returning in balance (the Nasdaq lost 0.4%, the S&P500 and the Dow Jones fell into the red).
Despite a drop of 8,040 in contact with 7,981, the CAC40 largely outperforms the other European places, thanks to LVMH (+2.8%) which brings Hermès (+2.3%) in its wake: the Euro-Stoxx50 does not win more than 0.1% towards 4,910 (rise slowed by the -6.5% fall in ASML), Frankfurt and London only gained +0.1% to +0.5%.
The indices seem insensitive to the reappearance of a strong selling trend on bonds since the beginning of April, reinforced by the latest comments from Jerome Powell (this Tuesday) who seems to rule out the prospect of a rate cut in June and who suggests that only 2 relaxations would be on the agenda in 2024.
Rates would therefore remain above 5.25% for another 6 months, a maintenance at the zenith synonymous with ever more substantial debt service.
With economic indicators surprising on the rise in the United States, stakeholders are focusing on the resilience of the economy, which would offset the disappointment on the cost of money front.
Investors want to continue to believe that yields – remaining at 15-year highs – will cause only limited damage to the real economy.
The surge in the yield on ten-year American Treasuries beyond 5% last October (the US ‘2-year’ is once again close to this zone, at 4.9700%) had, for the record, ended in a phase consolidation for global stock markets.
The ten-year paper, which reached five-month highs yesterday, relaxed – finally – by -4 Points towards 4.62% (level comparable to the end of November 2023).
On the European bond market, benchmark yields are easing slightly: that of the ten-year German Bund is down slightly (-2Pt) around 2.467%, our OATs are showing -2.3Pt towards 2.9800%, the Italian construction companies are doing better with -4.5 points at 3.8650%.
The speakers also want to focus on the corporate results season which is currently in full swing.
The Dutch semiconductor industry giant ASML reported this morning unsurprising first quarter results and confirmed its annual forecasts, but announced a 5% increase in its dividend: sales, however, disappointed and the stock lost more than -6%.
The day’s economic agenda, however, looked relatively calm.
The final inflation figures in the euro zone for the month of April were published this morning. It stood at 2.4% in March, compared to 2.6% in February, according to Eurostat which therefore confirms its rapid estimate for last month, while that of the European Union increased from 2.8% at 2.6% month-on-month.
On FOREX, the Euro climbs 0.2% towards 1.0640, the ‘$-Index’ crumbles by -0.1% towards 106.25.
The barrel of Brent corrects by -0.9% towards $89.3, an ounce of gold remains close to the peaks at $2,390, an ounce of silver remains around $28.7.
In the United Kingdom, inflation fell to 3.2% annualized in April, compared to 3.4% in March, paving the way for a future rate cut by the Bank of England.
On the stock side in France, Oddo BHF reiterates its ‘outperformance’ opinion on LVMH with a price target raised from 835 to 857 euros, suggesting a 12-month upside potential of close to 10%, the day after the activity point quarterly from the world’s number one luxury brand. LVMH achieved sales of 20.7 billion euros in the first quarter of 2024, organic growth of 3% (-2% as reported).
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