(CercleFinance.com) – The rise is tempered a little on the Paris stock exchange, which is continuing its rebound that began yesterday with strength and determination: the CAC40 is close to the 1.5% increase (to 7,120), in the wake of banks and insurers (+4%), amid easing concerns about the health of the global financial system.
The ‘risk-on’ is back as evidenced by the heavy relapse of the bond markets (OATs tighten from +15 to +16 basis points, Bunds from +18 points to 2.28%… and T-Bonds US +11pts at 3.585%).
The stock market term for April is already positive by +3%, which erases in 48 hours half of the ground lost in March, the annual performance again exceeds +10%.
The rebound exceeded +5% in 24 hours (and in 12 hours of continuous quotations), the CAC40 returned to 4% of its historic highs of March 6.
The rebound of the day is not specifically linked to the rejection of the motion of censure against the Pensions Act at 64 (the Euro-Stoxx50 shows the same gain as the CAC): no reaction from OATs or ‘futures’ on the CAC40, so no ‘relief’ when the government said it feared a downgrading of the French debt by the rating agencies in the event of rejection.
On Wall Street, the gains remain modest (+0.5%) despite the hope of a resolution of the ‘Fisrt Republic’ problem: the FED would be ready to finance the guarantee of all deposits in US regional banks, which would eliminate a source of major stress (risk of bank-runs and cascading bankruptcies).
On the ‘stats’ side, a surprise in the United States with the jump in resales of second-hand homes, up 14.5% in February (to 4.58 million units according to the NAR), against + 5.5% expected: a jump which would be due to a one-off easing of rates in January which would have re-motivated buyers last month.
This rebound puts an end to 12 consecutive months of decline: it essentially reflects the dynamism of the market on the west coast of the country.
In detail, sales increased by 4% in the Northeast and 13.5% in the Midwest and they posted gains of 15.9% and 19.4% respectively in the South (Florida) and in the United States. ‘West (California).
Median home prices edged down 0.2% year-on-year to $363,000.
In Europe, new car sales rebounded by +12.2% in February in: the base effect is favorable and will be even more so in March since everything had frozen in March 2022 with the start of the war in Ukraine.
A flat all the same with the ZEW barometer of the morale of the German business circles: it fell much more brutally than expected, to 13 against 28.1 last month.
Christine Lagarde, the President of the ECB, assured yesterday that ‘financial tensions could temper demand and do some of the work that would otherwise have been done by a restrictive monetary policy: without these tensions, we would have indicated that further rate hikes were needed’.
In other words, the cycle of rate hikes could well be over, since a restrictive policy is no longer necessary given the already very tight financial conditions in the markets.
As a London trader summed it up yesterday, ‘risks surrounding the banking system have become more important than monetary policy objectives’.
While growing fears about banks have fueled market volatility in recent days, investors are now awaiting announcements from the US Federal Reserve (Wednesday evening at 7 p.m.) which will be followed by a press conference by its chairman Jerome Powell.
According to the CME Group’s FedWatch barometer, the probability estimated by investors of a rate hike of 25 basis points hovers around 77%, while only 23% of investors expect the status quo.
An increase of 25Pts by the FED against +50Pts by the ECB, this weakens the Dollar against the Euro: it yields -0.5% towards 1.07750E… but the Dollar Index only yields overall -0, 1%).
In the corporate news, the banks monopolize the first places (Sté Générale and AXA gain 3.8 to 4%) but it is Renault which imposes itself in the lead with +4.1%.
The title Mr.Bricolage gains nearly 4% in Paris after the announcement of a partnership project in purchasing with the British Kingfisher.
Air Liquide announces that it will invest approximately 60 million euros to modernize two air gas separation units (ASU) that the French industrial group operates in the Tianjin industrial basin in China.
Colas announced on Tuesday that it is investing in the French start-up XXII in order to accelerate the use of computer vision in artificial intelligence (AI).
Finally, Sopra Steria announces a conditional agreement to launch a takeover bid for all Ordina shares at a price of 5.75 euros per share (excluding the proposed dividend), i.e. a premium of 36 % on the March 14 closing price.
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