CAC40: Red lantern in Europe, W-Street stable, $ at +0.5%.

(CercleFinance.com) - The Paris stock market is down -1%, with the CAC40 threatening to break the 7,400-point barrier, penalized in particular by URW (-3%) and the previous day's stars, Kering and LVMH (-2.
8% and 2.3%).

The Parisian index is catching its breath after eight consecutive sessions of gains, a momentum that brought it close to the psychologically important 7500-point threshold.

Sectors most dependent on economic cycles, such as raw materials and energy, also returned to favour yesterday, as Beijing expressed its intention to stimulate demand to strengthen the recovery.
European markets consolidated overall (-0.5% to 4,960 for the E-Stoxx50), while Wall Street attempted to rebound from Monday's losses (-0.6% on average): the Dow Jones fell by -0.2%, the S&P500 gained and the Nasdaq recovered +0.6% to 19.850Pts.

The 'number of the day' seems to have had no impact on the US indices, but the Dollar accelerated upwards, rising from +0.3 to +0.45% (to 1.0505) against the Euro.
Non-farm productivity in the USA rose by an annualized 2.2% in the third quarter of 2024, according to the Labor Department, which confirms on second reading its first estimate published a month ago.
This increase reflects a 3.5% rise in total production, while the number of hours worked rose by only 1.2%, figures also confirmed in relation to their preliminary announcement.

With hourly wage growth revised down from 4.2% to 3.1%, the rise in US non-farm unit labor costs was also revised down by -1.1 percentage points, to 0.8%.

US T-Bonds tightened by +4.3 and +3.5pts respectively on the 10-year and 2-year maturities, to 4.243% and 4.162%.

In Europe, investors were informed this morning of the level of inflation in Germany.
According to the final version of the consumer price index published on Tuesday by Destatis, the Federal Statistical Office, inflation in Germany reached 2.2% year-on-year in November.

No reaction from the bond markets, and the differential between the yield on ten-year German Bunds (2.125%) and that on OATs of the same maturity (2.873%) continues to contract, with the spread now down to 75 basis points from 88 basis points 10 days ago.
Note the perfect stability of yields on all Euro-denominated Treasury bonds... except for Italian BTP, which is up +2pts to 3.213%.

In France, political uncertainty remains unresolved, with Emmanuel Macron yet to name a prime minister, while the Barnier government fell almost a week ago.

However, "investors don't seem too alarmed by the situation", observes Jim Reid, market analyst at Deutsche Bank.

The question now is whether the last few sessions have simply been a case of catching up after the recent underperformance, or whether we should be hoping for a more sustainable upward trajectory.

The first 'test' will come on Thursday with the ECB meeting, which is expected to result in a further 25 basis point cut in its key rates.

In view of the sluggish growth on the Old Continent, some analysts believe that the Frankfurt-based institution could decide to reduce the cost of money to lower levels than previously anticipated.
The euro appeared weaker on Tuesday, falling -0.3% against the dollar to 1.0550. The greenback gained +0.2% on average against other currencies.

Odile Camblain, head of diversified management at Crédit Mutuel AM, comments: "Given the difficult economic climate in the eurozone, the ECB could be led to go further in its rate-cutting cycle."

ECB President Christine Lagarde recently spoke to the European Parliament about the risks to growth prospects in the eurozone in general, and in France in particular.

The rate of interest on deposits could therefore be lowered to 1.75% sooner than expected, which could have a positive impact on the French economy", stresses the fund manager.

In other French company news, Vivendi announced that its Combined General Meeting had approved, by more than 97.5% of votes cast, the proposed demerger of Canal+, Havas and Louis Hachette Group (which will combine its 66.53% stake in Lagardère and 100% of Prisma Media).

Stellantis announced on Tuesday that it plans to invest up to 4.1 billion euros with its Chinese partner CATL in the construction of a large-scale battery plant in Spain.

Air Liquide announces that it has received a 110 million euro grant from the European Innovation Fund for its ENHANCE project, designed to produce and distribute low-carbon, renewable hydrogen derived from ammonia.

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