CAC40: +0.5% for a weekly score of +0.9%, easing of rates

(CercleFinance.com) - The Paris Bourse ends a turbulent week on a positive note (weekly gain of +0.
9%).
The CAC40 gains +0.5% towards 7,980 and is close to 8,000, while the Euro-Stoxx50 and DAX40 break a 9th and 10th all-time record in 2 weeks at 5,314 and 21,800 respectively.314 and 21,800 respectively (+8.3% for the Euro-stoxx50 in 1 month, +9.5% for the DAX).
January is proving to be the most bullish month of the 21st century, with the current uptrend catching up with the US indices after the spectacular underperformance of 2024.
Encouragingly, the uptrend in Europe has broadened, with all 25 sectors making up the STOXX 600 advancing yesterday", say Danske Bank's teams.

Despite the DeepSeek shockwave, the Fed's cautious stance and the mixed results published by several US tech giants, investors are still finding a good reason to push valuations to new heights: they were reassured yesterday by the action of the European Central Bank (ECB), which lowered rates for the fourth consecutive time and opened the door to further monetary easing in the months ahead.

Florian Ielpo, Head of Macroeconomic Research at Lombard Odier IM, points out that "this 'dovish' shift is crucial if European equity markets are to regain their attractiveness".

"The ECB seems to be taking a further step towards a more accommodative stance (...) and this should support European assets in the medium term", says the analyst.

On the figures front, US consumer spending rose by 0.7% in December 2024 compared with the previous month, according to the Commerce Department, on the back of a 0.4% month-on-month increase in income.

Published simultaneously, the PCE price index - closely watched by the Fed - rose by 2.6% at annual rate in December, after 2.4% in November. Excluding food and energy, its annual rise remained constant at +2.8% month-on-month.
'If the core PCE index comes out above the expected consensus of 2.8% y/y, this would give the Fed further reason to postpone its rate cuts', warned Dilin Wu, strategist at Pepperstone.
US T-Bonds tightened marginally by +1Pt to 4.523% for the '10-yr' and 4.77% for the '30-yr': today's PCE is therefore a non-event, which will reassure Wall Street.

Friday also saw the publication of the eagerly awaited German inflation figures: down 0.2%, perfectly in line with expectations, Bunds eased -4.5pts to 2.474%.

Prices had slipped from 2.4% to 2.8% year-on-year in December due to an unfavorable base effect on energy prices.
In France, consumer prices are expected to rise by 1.4% year-on-year in January 2025, according to Insee, marking a slight acceleration after the +1.3% annual rate observed in December 2024.
Our OATs shed 6pts to 3.2050% and the spread with the Bund contracts to 72.5pts.

Investors' attention should also be focused on the 4th quarter earnings season, which continues to be in full swing.

Last night, Apple reported a performance ahead of market estimates, despite current difficulties in China, which saw its share price rise by more than 3% in electronic trading.

Even Intel, the poor performer in American tech over the past few years, published better-than-expected accounts, raising hopes that the world's former number one chipmaker's business will soon turn around.

The current climate of caution surrounding the evolution of trade policy could, however, be the trend, as Donald Trump prepares to impose tariffs of 25% on imports from Canada and Mexico as early as tomorrow.

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