CAC40: down towards 7935, WStreet stagnates, as do US rates

(CercleFinance.com) - The Paris Bourse has trimmed its losses a little, from -0.
9% this morning, to -0.6% at 7,935 points, with the CAC40 still penalized by Stellantis (-4%) and TotalEnergies (-2.2%).
On the other hand, Teleperformance (up over 9%) and Worldline (same rebound) have also taken off.
US markets reopened slightly higher, with +0.1% on the Dow Jones and S&P500, +0.3% on the Nasdaq, which only wiped out part of the losses incurred between 9:30 and 10:00 pm the previous day (-1.5% in a straight line and -0.3% in the end).

Closed yesterday for the May 1st vacation, the Paris Bourse is trading in a cautious market in the wake of the Fed's statement, which cast doubt on the timing of its next rate cuts (a consensus seems to be emerging for the November meeting).

Wall Street tried to reassure itself with a "little phrase" from Jerome Powell affirming that the Fed's next move will not be a rate hike... but investors need to take on board that the outlook has changed considerably in 4 months, with expectations of 7 cuts revised to one easing (150Pts away from the initial scenario).

Indeed, the Fed notes that growth remains 'solid', job creation and consumption remain robust, while inflation has stopped falling for several months now.

'The inflation problem may not be easy to solve if the economy continues to do well', admit Commerzbank analysts.

For the German bank, no interest rate cut is therefore to be expected before December.

Admittedly, disinflation came to a halt in the first quarter, but this is by no means enough to envisage a 'pivot within the pivot', i.e. a return to a scenario of rate hikes", says Bastien Drut, head of strategy and economic research at CPRAM.

"The bias therefore remains towards rate cuts, even if Powell has deliberately remained very vague about the timing, given the uncertainty surrounding inflation", he stresses.

The uncertainty surrounding the monetary easing agenda is keeping US bond yields glued to yesterday's levels, i.e. those prior to the 8 p.m. press release, with the '10-yr' broadly unchanged at 4.645%, the '2-yr' easing a little from 5.02 to 4.95%, and the '30-yr' stuck at 4.77% (having just rallied +3pts after US figures released at 2:30 p.m.).
Non-farm productivity rose by an annualized 0.3% in the first quarter of 2024, according to the Labor Department's first estimate, due to a 1.3% rise in total output for a 1% increase in the number of hours worked.

Given this weak rise in productivity, but also a 5% increase in hourly wages, non-farm unit labor costs in the United States climbed by 4.7% for the first three months of this year... this is what is upsetting the markets.

The US trade deficit remained virtually unchanged at $69.4 billion in March, compared with the previous month's $69.5 billion (which was revised from an initial estimate of $68.9 billion), according to the Commerce Department.

This 0.1% month-on-month decline in the deficit resulted from a 1.6% decrease in US imports of goods and services, to $327 billion, and a 2% contraction in exports, to $257.6 billion.
Weekly jobless claims stagnate once again at 208.000 (and that's 2 months 'standing still').


On the European statistics front, the HCOB PMI index for eurozone manufacturing settled below the 50 no-change mark separating contraction from growth for the 22nd consecutive month, signalling a further deterioration in economic conditions in April.
Having fallen from 46.1 in March to 45.7, it also highlights a slight acceleration in the contraction of the eurozone manufacturing sector compared with the previous month, with strong divergences in trends at national level.

In France, the PMI manufacturing index fell from 46.2 in March to 45.3 in April, marking the fifteenth consecutive deterioration in the sector's economic situation, with the contraction posting its fastest pace since January.
Our OATs and Bunds eased symbolically by -1.4 to -1.5Pts to 2.568% and 2.059% respectively, Italian BTPs by -2.5Pts to 3.886%.
The euro is down -0.3% against the dollar at 1.0680 (24-hour sliding range), while the yen is holding on to yesterday's gains (BoJ intervention?) at $154.5.

Lastly, in the news for French companies, Worldline reports first-quarter 2024 sales of just under 1.1 billion euros, representing organic growth of 2.5%, with a 3.9% increase in merchant services more than offsetting a 1.4% decline in financial services.

Technip Energies reported EPS for the first three months of 2024 (adjusted) up 11% to 0.50 euros, but a recurring EBIT margin down 0.3 points to 7.3% on sales up 8% to 1.52 billion euros.

For the first three months of the year, ArcelorMittal posted earnings before interest, taxes, depreciation and amortization (Ebitda) - the indicator most closely followed by investors - of $1.96 billion, up 34% on the previous quarter.

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