(CercleFinance.com) – The Paris Stock Exchange is not giving up, even after the publication of employment figures of a vigor that no one had expected: the CAC40 – boosted by the +3% of Total Energies – does not give in nothing, not an inch of ground, and it even progresses by +0.2% to 7,181 points (+1.3% weekly).
The CAC40 ‘GR’ continues to break absolute records by rising above 21,130 (more than 100pts better than January 5, 2022).
The Euro-Stoxx50 is down a bit (-0.1%), in the wake of the S&P500 (-0.7%) and the Nasdaq (-1.1%, while Amazon and Google are down sharply, Apple has already written off its initial losses).
Amazon reported its first annual loss since 2014 but the cloud business continues to grow at a brisk pace.
The rise in rates does not even penalize the ‘bull trend’: the correction of the day does not even erase half of the improvement of the day before and the stock market indices will complete an 18th week of increases, enamelled by 2 consolidations (mid -December) and 2 weeks without a well-defined trend.
A 14 out of 18, then a 4 out of 5 for 2023, is in theory a sign of colossal market strength… but it can also consecrate the establishment of an exceptional disconnect and complacency, with a rise which is self-sustaining through a systematic reversal of a ‘cautious’ consensus… and which has every reason to be so.
What the markets oppose is the hope of a ‘soft landing’ for the economy.
And the American economy seems indeed to escape the beginnings of a recession if we stick to the spectacular figures published at 2:30 p.m.
The ‘NFP’ reports the creation of 517,000 non-agricultural jobs in January, well above the 185,000 expected (it is almost 3 times more) after 260,000 the previous month (but this score is also significantly revised at the rise).
The unemployment rate also came out at the antithesis of the consensus: it turned out to be much better than expected at 3.4% (-0.1%), against 3.6% expected).
But isn’t this a deceptive fall in unemployment: despite all the jobs created and the decline of the ‘unemployed’, the rate of participation in the labor force (the active population) has remained stable at 62.4%, a level 0.9 points lower than in February 2020.
Moreover, the average hourly income increased at an annual rate of 4.4%, after 4.8% in December.
To be completely complete, job creations for the previous 2 months have been revised from 256,000 to 290,000 for November and from 223,000 to 260,000 for December, ie a total revision balance of 71,000.
In all, these are about 400,000 more jobs than anticipated over the past 3 months.
The ‘NFP’ laughs at the layoff plans that are multiplying among the big technological groups.
And nothing should dissuade the markets from betting on a continuation of the rise since the messages of the Fed and the Bank of England were perceived as more accommodating, that of the ECB evoking a stabilization of inflationary risks and a decline in direction of its goal.
There were also numbers in Europe, with no impact on stock market indices: the PMI index published this morning shows that private sector activity in the eurozone has returned to expansion for the first time since June 2022.
S&P Global’s composite PMI thus rose from 49.7 in December 2022 to 50.3 in January (level revised from a flash estimate of 50.2).
On the interest rate market side: our OATs are up by +14pts to 2.65%, the Bunds by +14.5% to 2.205%, the Italian BTPs by +14 to 4.03%.
Across the Atlantic, T-Bonds deteriorated by +10pts to 3.500%.
One of the big losers of the day is gold with a relapse of -2% towards $1870; i.e. -4% in 48 hours… and the precious metal declines whether rates rise or relax, which is quite disturbing.
The big winner will therefore remain the Dollar, boosted by the ‘NFP’ in January and which recovered almost 0.9% against the Euro towards 1.0810, the Dollar Index posting +0.8% at 102.55.
In France, Sanofi (-2%) published an EPS from activities of 8.26 euros for the year 2022, up 25.9% (+17.1% at constant exchange rates), and indicates that it has achieved its medium-term operating margin objectives of 30% and cost savings of 2.5 billion euros. The health giant’s turnover increased by 13.9% (+7% at CER) to 43 billion.
Kering announces the appointment of Raffaella Cornaggia as CEO of Kering Beauty. A member of the group’s executive committee, she developed beauty expertise for Bottega Veneta, Balenciaga, Alexander McQueen, Pomellato and Qeelin.
TotalEnergies announced on Friday that it had brought Crédit Agricole Assurances into the capital of a portfolio of renewable energy projects in France. The group says it has sold to the subsidiary of the green bank a 50% stake in a 234 MW portfolio made up of 23 solar power plants with a capacity of 168 MW and six wind power plants of 67 MW.
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