(CercleFinance.com) – The Paris Stock Exchange gained up to +3.6% and peaked at 3,466, an unprecedented display of euphoria since October 13.
40 minutes before the close, the CAC40 is still showing +2.6% at 6,405 Pts (i.e. +2.2% weekly) while the US indices are… in the red.
The +2.3% increase in the CAC40 before the NFP was a miracle: one would have thought that a few insiders would have had very encouraging signs concerning a clear reversal of the trend (downward) on the labor market… but this is absolutely not the case, even if the unemployment rate rose 0.1% more than forecast (does this justify +3%?).
It looks like one of those ‘out of nowhere’ rises but so characteristic of an algorithmic pick-up (6 o’clock funicular rise, with a cap at 3:03 p.m., without even a single retracement within a bullish channel with such a straight line that only a computer program can build one of this type).
The Euro-Stoxx50 is also in full euphoria with +2.4% at 3,680 while Wall Street has never posted a gain greater than 1.2% (and very quickly, the trend reversed, the Nasdaq losing -0.4%).
The outperformance of European markets is breathtaking, especially after the latest comments from Christine Lagarde who declared that ‘the ECB must do more against inflation’… which suggests an even more restrictive monetary policy (comments received 5/ 5 by forex traders: the Euro soars by +1.5% to $0.9900).
Moreover, the interest rate markets are deteriorating with OATs which tend by +3pts to 2.8300% and Bunds with +5.5pts to 2.3005%.
In the United States, the ‘NFP’ does not look like the ‘little miracle’ that the equity indices seem to celebrate either: the T-Bonds show +7 Pts at 4.1720%.
How to justify the large gap between the bond market and the stock market indices in Europe, then the large gap between the CAC40 and the S&P500 (-0.2%)?
Would the US employment figures therefore be interpreted very differently depending on the continent and the type of manager (equities vs. bonds)?
In concrete terms, the US economy therefore created more jobs than expected in October (as the ADP report foreshadowed), but the increase in the unemployment rate to 3.7% (compared to 3.5%) suggests a certain easing of labor market conditions, which would allow the Federal Reserve (Fed) to slow down the pace of its monetary tightening as of December (yet the weekly unemployment figures do not reflect anything like this in October).
The Labor Department counted +261,000 nonfarm payrolls created last month after 315,000 (revised from 263,000) in September, beating a median consensus of +200,000.
The average hourly wage increased by 0.4%, while the consensus was expecting an increase of 0.3%… again, what justifies the Euphoria?
Euphoria also on the barrel of oil ‘Brent’ which has also been climbing like a funicular since midnight: the rise now reaches +4.3% to $98.5, enough to fuel inflationary fears.
It doesn’t seem to have anything to do with a jump in activity in Europe:
this morning, investors were able to take note of the S&P Global composite PMI index in France, which fell from 1.2 in September to 50.2 in October.
it thus shows its lowest level since March 2021 and therefore signals only marginal growth in the activity of the French private sector at the start of the fourth quarter of 2022.
The weak performance of the manufacturing sector weighed heavily on overall growth, although a moderate increase in the activity of service providers helped to offset the sharp drop in production observed among manufacturers.
In corporate news, luxury stocks and banks are celebrating (+6.4% for Kéring – on rumors of Tom Ford’s takeover – and for L’Oréal, +5% for LVMH, +3 % for Hermès then +5% for Société Générale, 2.5% for BNP Paribas).
The ‘luxury’ is once again benefiting from rumors (anonymous, not sourced… wind in reality) evoking the end of the zero Covid policy in China.
JCDecaux (+13.5%) published yesterday evening an adjusted turnover of 808.4 ME for the 3rd quarter, an organic increase of 9% compared to the same period a year earlier.
Teleperformance published yesterday evening a turnover of 2056 ME for the 3rd quarter, up 7% on a like-for-like basis compared to the same period a year earlier.
This morning, Societe Generale publishes underlying net income group share up 1.4% to 1.41 billion euros for the third quarter of 2022, as well as underlying gross operating income in growth of 2.9% to 2.47 billion.
Eiffage posted revenue at September 30, 2022 of 14.6 billion euros, up 8.1% on an actual basis and 7.1% at constant scope and exchange rates, with a significant increase in works activities ( +7.1%) and concessions (+13.3%).
On the occasion of its quarterly publication, Spie indicates that it is updating its outlook for 2022, to now aim for organic growth of at least +5% (and no longer at least +4%), while maintaining its forecast of an EBITA margin of 6.3% of production.
EDF announces that it is adjusting its estimate of nuclear production in France for 2022 to a range of 275 to 285 TWh, against 280-300 TWh previously, while leaving those for 2023 and 2024 unchanged, at 300-330 TWh and 315-345 TWh respectively. .
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