(CercleFinance.com) – The Paris Stock Exchange ends the week on a high (+0.94%), in ‘rally’ mode with the crossing of 7,233 (+1.9% weekly), with the clear objective of equal the absolute record of January 5, 2022 within a handful of sessions.
The Euro-Stoxx50 (+0.25% to 4,252) is back in the green in the wake of the Dow Jones (+0.2%) while the S&P500 only crumbles by -0.1%, the Nasdaq -0.1% (after -1.1% at 3:30 p.m.).
For the European indices, it’s a fabulous 14 out of 18 series (of weekly rise), with only 2 weeks of consolidation and 2 ‘unchanged’, then a 4 out of 5 for 2023, this is in theory a sign of colossal strength of the market.
Around 4 p.m., we became aware of the ISM for ‘services’ in the United States, which was much higher than expected in January.
The ISM non-manufacturing index made an unexpected jump of +5pts, from 49.2 to 55.2 last month, while economists were expecting an average figure of 50.5.
The new orders sub-index literally exploded by +15pts to reach 60.4 in January against 45.2 the previous month.
We also learned at 2:30 p.m. of the US employment figures of a strength that no one had expected.
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 opposite end 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.
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).
The rise in rates does not even penalize the ‘bull trend’ on bonds: the correction of the day does not even erase half of the improvement of the previous day: our OATs tighten by +13Pts to 2.64%, Bunds from +12.5% to 2.1800%, Italian BTPs from +12.4 to 4.013%. Across the Atlantic, T-Bonds deteriorated by +13pts 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 (-1.9%) published an EPS from activities of 8.26 euros per share for the year 2022, up 25.9% (+17.1% at constant exchange rates ), and indicated that it had 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 this morning that it has 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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