CAC40: soporific session, ECB to cut rates again

(CercleFinance.com) - The ECB's announcement and subsequent press conference are the perfect prototype of a 'non-event', with the CAC40 (+0.
1 to 7,430) falling back close to its equilibrium point around 7,425/7.435Pts points since 10H this morning.
The CAC40 index didn't even flinch at the announcement of a -0.25Pts cut, to 3.00% (Repo), 3.15% and 3.40% respectively, to take effect on December 18.
The Euro-Stoxx50 has also been stuck between +0.1% and +0.2% for over 6 hours, and the opening of Wall Street has made no difference: the Dow Jones is down -0.2%, the S&P500 -0.4% and the Nasdaq -0.4%.
For the record, it was Donald Trump who came to ring the bell to mark the opening of Wall Street at 3:30 p.m... the day after the Nasdaq had set a record closing high of over 20,000pts (for the 1st time in history).

The ECB's press release contained a few economic indications: no reaction to the lowering of EU GDP growth forecasts for 2025 (+0.7%)... as the recovery is slower than expected in 2024.
The ECB evokes a 'neutral rate' (assuming inflation settles close to the 2% pivot) of 1.75 to 2.50% within 1 year (the range remains fairly wide), which implies a continued rate cut at a rate of -25Pts per quarter.
The ECB estimates that growth in Q3 reached +0.4% thanks to tourism (Olympic Games effect) before slowing in early autumn (drop in job offers): we'll have to wait until 2026 to see growth accelerate again to +1.4%, then 1.3% in 2027.

Inflation is expected to reach +2.3% in 2025 (after +2.4% in 2024) and +1.9% in 2026 and 2027 (prices remaining high with the rise in wages observed in the zone).

The FED is expected to follow the ECB's lead next Wednesday with a 25 basis point easing of its key rates, a scenario expected by 85% of investors.

'The divergence in economic trajectory between the USA and Europe has probably never been greater, and it is perhaps high time for the ECB to move away from its American counterpart', explains one manager.

In addition to the ECB announcements, investors were also awaiting US producer prices and jobless claims figures in the early afternoon.
The Labor Department reports that US producer prices rose by 0.4% in November compared with the previous month, and by 0.1% excluding food, energy and commercial services.
Expressed as an annual variation, the rise in US producer prices accelerated last month compared with October by 0.4 points to 3% on a gross basis, but held steady at 3.5% excluding food, energy and commercial services.

The Labor Department announced that 242.000 new jobless claims in the US in the week to December 2, up 17,000 on the previous week.

The four-week moving average - more representative of the underlying trend - came in at 224,250, up 5,750 on the previous week.

Finally, the number of people receiving regular benefits rose by 15,000 to 1,886,000 in the week to November 25, the most recent period available for this statistic.

On the bond front, our OATs eased by -1.7Pt and Bunds by -1.2Pt, with the spread contracting to just below 76Pts.
Across the Atlantic, T-Bonds tightened by +2.8pts to 4.3000%, the '2-yr' added +1.5pts to 4.172%... and Italian BTPs had a bad day with +8pts to 3.2810% (after 2 weeks of outperformance).

On the FOREX, the Dollar gained +0.1% on average against the major currencies, the Euro consolidated at the margin (-0.15% to 1.0475), the Yen held up well (-0.1%) but the Pound fell -0.55%, despite a yield up +6Pts to 4.38%.

In French company news, Bic announced last night the acquisition of Tangle Teezer, a brand of high-quality detangling hairbrushes, for 200 ME. The Group has also begun a transition process to appoint a new CEO by September 30, 2025, as Gonzalve Bich's term of office comes to an end.

Ahead of its Investor Day, Sopra Steria is announcing its financial targets for 2028, including an improvement in operating margin to between 10% and 11%, as well as an increase in return on capital employed before tax to around 20%.

Finally, the Seb group is announcing the validation by the Science Based Targets (SBTi) initiative of its new targets accelerating the reduction of greenhouse gas (GHG) emissions, covering scopes 1, 2 and 3, by 2030 and 2050.

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