(CercleFinance.com) – After a difficult week and a brief foray below 7,400 Pts, the Paris Stock Exchange ended the week on a high note with a gain of +1.3% towards 7,435, which reduced the weekly decline to -0.9 %: the decisions of the central banks – the Fed and the ECB – have been well digested, including their restrictive approach.
The Euro-Stoxx50 index is just as well oriented (+1.1% to 4,332), in the wake of a positive opening on Wall Street, in the wake of Apple (+4.5%).
The 3 indices posted +1% on average from the outset and the rise is growing: the Dow Jones gains +1.3%, the Nasdaq and the S&P500 more than 1.5%.
Given the euphoria of the post-NFP day, the specter of recession is receding in the United States and Wall Street applauds.
However, the markets remain very hollow (1.8 billion euros traded in Paris in 8 hours) and weakened by doubts surrounding the ability of central banks to bring down inflation.
And those doubts are not going to dissipate with the release of the April ‘NFP’ with surprisingly robust employment figures.
The US economy has indeed generated 253,000 non-farm jobs in April, according to the Department of Labor, a number higher than market expectations (+160,000), and even that of Jefferies which expected up to 185,000.
The unemployment rate in particular fell by 0.1 points to 3.4% (the lowest since 1969), the labor force participation rate remained stable at 62.6%, a level lower than 0.7 point to that of February 2020, and the average hourly income increased at an annual rate of 4.4%, which is much stronger than expected.
This conceals the downward revision of hirings over the previous two months, from 326,000 to 248,000 for February and from 236,000 to 165,000 for March, i.e. a total revision balance of -149,000 for these two months.
The impact on bonds is clearly negative with yields jumping from +8pts (OAT at 2.88%) to +10pts (on T-Bonds at 3.45%).
“There is no doubt that the markets are nervous at the moment, awaiting the next developments around the US regional banking crisis,” said Jim Reid, market strategist at Deutsche Bank.
‘Anyway, the next few quarters will be long, bumpy and stressful’, warns the analyst.
Investors also took note of the figures for industrial production in France and then retail sales in the euro zone, which will inform them of the reality of a recessionary threat on the Old Continent.
In March 2023 in France, production fell back over one month in manufacturing industry (‑1.1% after +1.3%) as in industry as a whole (‑1.1% after +1, 4%), according to data corrected for seasonal variations and working days from INSEE.
In March 2023, the seasonally adjusted retail sales volume fell by 1.2% in the euro area and by 1.1% in the EU, compared to February, according to Eurostat estimates.
The Euro seems on track to end the day unchanged against the Dollar, between 1.1000 and 1.1010… and it is the Swiss Franc which is down solo by -0.75% against the main world currencies.
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