(CercleFinance.com) – The Paris Stock Exchange will try to save its supports by 5:35 p.m.
The CAC40 began the session down -1.8%… then this decline was halved before the American figures published at 2:30 p.m. (the CAC40 rising towards 7,975).
Heaviness imposes itself again 30 minutes from the closing with a CAC40 at -1.5% which returns to flirt with 7,920: we will have to finish above 7,930 to avoid a risk of a more serious slide.
The SBF-120 (-1.5% to 5,990) could also ‘save’ the 6,000.
Ditto for the Euro-Stoxx50 falling -1.4% towards 4,916 and which will have to preserve 4,930.
To better understand this sequence of ‘saloon doors’, we must turn to Wall Street where the rebound attempt hoped for this morning is coming to an end: the S&P500 and the Nasdaq deteriorate by -0.2% in the wake of Tesla (-3 .8%, the stock falls below the $500 billion ‘capi’ mark).
The stock markets continue to suffer from the sudden rise in bond yields, which was sharply accentuated yesterday in reaction to retail sales figures in the United States which came out above expectations.
The yield on 10-year Treasuries, a barometer of market sentiment on the health of the American economy, is still up +2 points at 4.648%, a peak of almost five months, the ’30-year’ peaks at 4.800% (4.765% tonight), the ‘2 years’ is close to the ‘5%’.
In Europe, the ten-year German Bund yield, benchmark for the euro zone, rises by +6Pts around 2.49% (2.51% at the highest), our OATs return to 3% (+6Pts) , Italian BTPs show +7 points at 3.907%.
In this context, investors fear that the high level of yields will prevent stocks from responding positively to the current corporate earnings season.
The increase in the ’30 years’ seems to have strongly penalized real estate:
the Commerce Department reports a 14.7% plunge in housing starts in the United States in March compared to the previous month, to 1,321,000 at an annualized rate, after a jump of 12.7% in FEBRUARY.
Building permits for American housing – supposed to foreshadow future housing starts – fell by 4.3% to 1,458,000 last month. Finally, housing completions fell by 13.5% to 1,469,000 (no ‘weather factor’ to explain this decline).
Industrial production in the United States increased again by 0.4% in March (just like in February), including a 3.1% jump in automobile production (vehicles and equipment).
Still according to the Federal Reserve which publishes these figures, the capacity utilization rate in American industry increased by 0.2 points to 78.4% in March, a level 1.2 points lower than its previous year. long-term average (1972-2023).
In Europe, the ZEW index, which measures the sentiment of investors and financial analysts in Germany, reached a level in April that it had not touched for two years, suggesting that Europe’s largest economy is on the way to get out of the rut.
The Mannheim-based economic institute indicates that its investor sentiment indicator rose to 42.9 this month, after 31.7 in March, the highest since March 2022.
The current conditions component, however, only slightly improved by 1.3 points, to -79.2, while analysts anticipated a more pronounced recovery, around -76.
The ZEW attributes the rise in its confidence index to the recovery in the global economy, with half of those surveyed in its study saying they expected a rebound in activity within six months.
The recent appreciation of the dollar against the euro also leads survey participants to predict a rebound in German exports in the future, explains the organization.
But the IMF is more pessimistic about German growth in 2024 (+0.2% instead of +0.5%) and in 2025 (+1.3% instead of +1.6%).
There were also highly anticipated ‘stats’ this morning in China and they came out mixed: China’s gross domestic product (GDP) grew by 5.3% year-on-year during the first quarter of 2024 (compared to +5, 2% at the end of 2023), according to data published Tuesday by the State Bureau of Statistics (BES), but retail sales fall from +5.5% to +3.3%, production by +7%. towards +4.5%.
On the geopolitical front, NBC believes it knows that an Israeli response to the Iranian shots on Sunday morning would be imminent: this could constitute a big ‘game changer’ and add a good dose of stress to the markets.
The euro manages to recover by 0.1% towards $1.0635, Gold regains more than 1% towards $2,370, ‘Brent’ oil is little changed, around $90.2, WTI is stable around $85.3 on the NYMEX.
On the values side, the financial giants Morgan Stanley and Bank of America published their first quarter accounts at midday: ‘BoA’ fell by -3.6% following the increase in its provisions for credit default (1.3 billion $ against 0.935 1 year ago), Morgan Stanley publishes a profit higher than expectations, driven by the ‘investment banking’ activity.
On the Old Continent, Ericsson reported this morning an increase in profits for the first three months of the year, despite a contraction in its sales over the period.
According to Berenberg strategists, the current economic uncertainties militate in favor of a ‘pause’ on the stock markets, which leads them to favor safer assets such as gold, energy or defensive values.
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