CAC40: rebound continues after ECB meeting

(CercleFinance.com) - The Paris Bourse remained on an upward trend on Friday morning, amid optimism about interest rate trends in the wake of decisions by the European Central Bank (ECB), while awaiting announcements from the Fed next week.
The CAC40 index advanced by 0.3% to 7460 points.

The Paris market ended Thursday's session with a gain of 0.5% to 7435 points after a hesitant session, with relief finally prevailing after the ECB's latest interventions.

However, it was a turbulent week for equity markets, torn between concerns over growth, weaker-than-expected US inflation figures and the ECB's rather reassuring stance.

At the end of its meeting on Thursday, the ECB cut its key rates by a quarter point as expected, while paving the way for a further easing of its policy, which came as a relief to investors.

Juliette Cohen, Strategist at CPR AM, hails "a rather accommodating speech leaving the door open to a further rate cut in October".

"The ECB's rate-cutting cycle could accelerate if growth continues to disappoint", agrees David Zahn, Head of Fixed Income for Europe at Franklin Templeton.

Despite its yo-yo movements over the past few days, the CAC 40 is currently up around 1.5% for the week as a whole.

The New York Stock Exchange also finished higher on Thursday, buoyed by press reports suggesting the still real possibility of a 50 basis point rate cut by the Fed next week.

Following this news, the Dow Jones gained 0.6%, the S&P 500 0.8% and the Nasdaq 1%, the latter helped by the continued recovery of Nvidia (+1.8%).

Good news for the markets: Wall Street is also heading for a positive week, proving that even disappointing inflation figures no longer scare investors.

In the Eurozone, investors this morning took note of the publication of industrial production figures for the month of July, giving a first glimpse of the growth to be expected in the region over the third quarter.

Seasonally-adjusted industrial production fell by 0.3% in the eurozone in July 2024, and by 0.1% in the EU, compared with June 2024, according to estimates from Eurostat, the European Union's statistical office.

In France, the consumer price index (CPI) rose by 0.5% month-on-month in August 2024, according to Insee, after +0.2% in July.

Market participants are also awaiting monthly economic indicators in the United States, including import prices and the Michigan confidence index.

On the fixed-income market, eurozone government bond yields tightened in the wake of the ECB's announcements, with the 10-year German Bund moving to 2.15% from 2.11% the previous day.

As yields rise, the euro continues to appreciate against the dollar, returning to close to 1.1090 against the greenback.

After their recent plunge on the previous day, crude oil prices are rebounding on the back of a calmer climate on the equity markets.

After falling to its lowest level since the end of 2023, a barrel of US light crude (West Texas Intermediate, WTI) recovered 0.5% to nearly $69.6, giving it a 0.1% gain for the week.

Brent crude, another oil benchmark, followed suit, gaining 0.4% to $72.5.

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