The Paris Bourse is stabilizing at record levels in a market that feels the need to breathe in the face of rising US bond yields. The “minutes” of the last meeting of the Federal Reserve’s monetary policy committee could shed light on the timing of the first interest rate hike tonight. The market nevertheless welcomes the surprise improvement in French household confidence, the index established by INSEE increasing by 2 points to 100 in December, its best level since September, against an expected decline to 97.
Shortly before 10 a.m., the Cac 40 is stable at 7,319.42 points (+ 0.03%) after a new peak at 7,335.24 in a business volume of 390 million euros.
Tensions on rates weighed on the Nasdaq Composite, which fell 1.3% last night, weighed down by major technology stocks, while banking rose. The Dow Jones set a new closing record, when the S&P 500 finished just below equilibrium, not without hitting a new high during the session.
Value versus growth
The yield on the US 10-year bond stabilizes around 1.6430% after hitting a six-week peak of 1.7% on Tuesday. While higher rates generally reflect a good economic environment, they make the cost of borrowing higher, thus penalizing growth stocks. Faced with inflation now considered sustainable, the Fed could decide to raise rates earlier than expected.
” It seems that the sharp rise in US yields this week has triggered a movement of growth towards value, or put differently, from the Nasdaq towards the Dow Jones, summarizes Jeffrey Halley, senior market analyst at Oanda. Whether this will last remains to be seen, this type of rotation has worn out over the past 18 months without really gaining momentum. There are only a few factors ‘are different this time’, in particular the Omicron variant which has been redesigned in Omi-gone [Omi-parti]. Second, the Federal Reserve has started cutting QE and is expected to raise rates shortly after the start of the year. ยป, He concludes.
Beyond the activity indices in services in the euro zone and in the United States, the market will monitor the results of the ADP survey on job creation in the private sector across the Atlantic in December. Some 4.5 million Americans left the job market in November, according to the Labor Department, a figure that could bolster wage inflation.
The automotive sector in the spotlight
Renault increased by 2.6%. Qualcomm announced the conclusion of agreements for the supply of chips to the French manufacturer, Volvo and Honda.
Michelin gained 1.7%, setting at the same time a new record. JPMorgan has raised its price target for the tire manufacturer’s title from 150 to 175 euros and Citi has raised theirs from 165 to 170.
Valeo takes 1.2%. The equipment manufacturer presented a Covid-19 detection terminal at the CES show in Las Vegas, the result of its research on electronic systems for controlling the thermal and physiological comfort of passengers and that of the driver’s state of vigilance through observing his gaze.
Conversely, Valneva loses another 3.7%, still penalized by the feeling that a new vaccine against Covid-19 is not necessary against an Omicron variant deemed less dangerous than the previous strains.