CAC40: geopolitical tension is falling, not interest rates

( – The Paris Stock Exchange seems to illustrate the funicular algo scenario with an irresistible progression since the end of the morning, the CAC40 showing +1.4% until around 8,125.
The Euro-Stoxx50 is not to be outdone with a surge of +1.5%, beyond 5,030 Points.
Wall Street straight away erases half of Friday’s losses (Dow Jones and S&P500 at +0.8/+0.9%, Nasdaq at more than 0.9%) following ‘rumors’ of Iranian strikes against military objectives in Israel.
The US indices have just posted 2 consecutive weeks of decline but remain quite close to the historic peaks recorded at the end of March.

The stock markets are regaining a sense of serenity because the time seems to have come to resort to diplomacy, according to the wishes of Joe Biden who seems to want to avoid an escalation in the Middle East at all costs.
The (geopolitical) tension therefore falls significantly with a VIX at -5.5% around 16.30, ‘Brent’ oil consolidates from $91 towards $89.6 (-0.6%) and gold below 2,350 $ after a brief ‘peak’ at $2,430 on Friday (and a close around $2,375).

Taking stock over 1 month and counting today’s rebound, the world stock markets are standing still, or even consolidating sluggishly, as inflation awakens in the United States and the increasingly cautious declarations of those responsible for the Fed.

Faced with doubts surrounding the timetable for a first rate cut across the Atlantic and an economic recovery which is still struggling to materialize in Europe, the stock markets are following a bumpier path.
The surprise of the day is that the deterioration of the bond markets does not further penalize Wall Street and the stock indices in general: the US ’10-year’ is in fact soaring by almost +15 points towards 4.642%, our OATs are stretching by + 9Pts towards 2.9510% and Bunds of +8Pts towards 2.44%, Italian BTPs of +10Pts towards 3.822%.

Investors therefore seem to be focusing on the results ‘season’ which begins to be in full swing from this week: some 44 companies belonging to the S&P 500 index, including six Dow Jones stocks, will publish their accounts this week.
Investors will be able to assess the ‘fundamentals’ of the economy through the accounts of listed companies… and optimism is there this Monday.

However, FactSet data now only predicts an increase of 0.9% in the profits of American groups in the first quarter, compared to a further +3.4% at the end of March.

While JPMorgan’s performance disappointed last Friday, Goldman Sachs’ accounts – expected at midday – reassured: ‘GS’ is little exposed to provisions for default risk on its – almost zero – outstanding corporate credit or to individuals).
The results from Bank of America and Morgan Stanley expected tomorrow will be particularly followed by the markets.

The announcements from Johnson & Johnson, Netflix and Procter & Gamble will also be closely monitored in the coming days.

In Europe, the week will be mainly animated on Wednesday by the results of ASML, one of the locomotives of the recent rise in European markets, then of Nokia.

According to analysts, favorable publications – and not just confined to the technology sector – would promote a stock market recovery by reinforcing optimism regarding stocks.

In terms of economic indicators, U.S. retail sales increased 0.7% sequentially in March, better than market expectations, following a 0.9% increase the previous month (revised). from an initial estimate which was +0.6%).

The Department of Commerce, which publishes these figures, specifies that excluding the automobile sector (vehicles and equipment), American retail sales increased by 1.1% last month, after an increase of 0.6% in FEBRUARY.
Manufacturing activity continued to contract in the New York region in April, remaining in negative territory for the fourth month in a row.
The ‘Empire State’ index – compiled by the regional branch of the Federal Reserve – stood at -14.3 this month, compared with -20.9 in March.
It is the sub-index of weekly hours worked which deteriorated most notably, to -10.6 against -10.4 last month, followed by that of deliveries (-14.4 against -6.9 last month). previous month) and the six-month horizon expectations sub-index deteriorated from 21.6 to 16.7.

In Europe, seasonally adjusted industrial production rose by 0.8% in the euro zone and by 0.7% in the EU in February from the previous month, according to Eurostat estimates, after falls of respectively 3% and 2.7% in January.

Investors’ eyes will also turn to Beijing, where Chinese gross domestic product (GDP) figures will be published tomorrow, providing valuable clues about the recovery of the world’s second-largest economy.

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