CAC40: back to 8000pts, supported by Societe Generale

(CercleFinance.com) - The Paris Bourse ended the session with a substantial gain of 1.
47%, at 8007 pts. The Paris index thus returned to its best levels for 8 months, with the explosive support of Société Générale, which gained 13.2% following the publication of its results, followed by Saint-Gobain (+6.2%) and Pernod Ricard (+3.2%).

The markets have demonstrated an astonishing ability to digest bad news and stock market "air holes": DeepSeek, Nvidia's plunge, the protectionist measures announced last weekend by US President Donald Trump (fuelling the spectre of a trade war between the US and its main trading partners), and the deepening US deficits....

Neither the highest valuations since 2000, nor the weak or clear signs of a deterioration in employment and consumption, nor Donald Trump's lunar "sorties" over Gaza (which trample international law and are likely to destabilize the Middle East) are slowing the advance of European markets.

The Euro-Stoxx50 (+1.6%) has thus set a new all-time record, followed by the DAX (+1.5%).

Across the Atlantic, the mood was gloomier, with the Dow Jones at -0.2% and the S&P500 and Nasdaq clawing back 0.2%, as Wall Street's hesitations seemed to be fuelling the European markets.

Since Tuesday, investors seem a little less worried about international political issues, taking the absence of further bad news as a positive signal, leading them to return to buying stocks in search of potential bargains.

Today, investors are brimming with confidence ahead of Amazon's results, scheduled for this evening, and tomorrow's U.S. employment report (NFP).

Meanwhile, the Labor Department announced this afternoon that 219,000 new jobless claims were registered in the U.S. in the week to January 27, an increase of 11.000 higher than the previous week, when the figure was revised upwards from 207,000 to 208,000.

Investors also took note of the figures for new orders in volume terms in the German manufacturing industry.
These rebounded by 6.9% in December 2024 compared with the previous month, according to Destatis CVS-CJO data, following a contraction of 5.2% in November (initially revised from -5.4%).

In a sign of the sluggish economic climate on the Old Continent, the volume of retail sales fell by 0.2% in the eurozone and by 0.3% in the EU, according to Eurostat. Compared with December 2023, the retail sales index rose by 1.9% in the eurozone and 2% in the EU.

The average annual level of retail trade volume for the year 2024 rose by 1% in the eurozone and 1.3% in the EU... which is equal to or lower than the inflation rate, so no 'nominal' growth on the consumption side.

After a weaker-than-expected ISM services report, arguing for continued Fed monetary easing, the yield on 10-year US Treasury bonds is back at around 4.434% (vs. 4.42% yesterday), while the Bund for the same maturity is at 2.3610% and our OATs at around 3.074% (OAT/Bund spread at +71.3Pts vs. 71.00 the previous day).

Across the Channel, the Bank of England (BoE) announced that its Monetary Policy Council had voted by a majority of seven to cut its key rate by 0.25 points to 4.5%, while the two remaining members would have preferred a 0.5 point reduction.

Fears of a trade war likely to slow US economic growth are weighing on the dollar, but the euro also remains under pressure ahead of the forthcoming German elections. It is hovering around $1.037 (-0.3%).

On the oil market, the price of Brent crude oil held steady at around $78.8. Finally, gold is holding firm and preserving its record highs at around $2,850.

In French corporate news, Société Générale reports a 2.4-fold increase in net income (group share) to €1.04 billion for the fourth quarter of 2024, representing a return on net tangible assets (ROTE) of 6.6%, and a 57% increase in gross operating income (GOI) to €2.03 billion.

Pernod Ricard reports net income, group share (RNPG) of 1.19 billion euros for the first half of 2024-25, down 24%, and operating profit from ordinary activities (ROC) of 1.98 billion, down 2% organically (-7% as published).

Pernod Ricard says it now anticipates a 'low single digit' organic decline in sales in 2024-25, while stabilizing its organic operating margin, 'in a difficult macro-economic environment and heightened geopolitical uncertainties'.

Finally, the French defense procurement agency (DGA) announced today that it has awarded Safran Electronics & Defense the "DROIDE" framework agreement in the field of land robotics. This 7-year framework agreement will explore the technologies needed to meet the capability requirements of land robotics in the 2030-2035 timeframe.

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