2024-05-10 10:30:17
The Parisian rating follows the other financial centers in Europe: London pushes back its peaks almost every session since April 23, Frankfurt also established a new record on Thursday, improved on Friday. The CAC 40 index of the Paris Stock Exchange reached 8,256.71 points, up 0.84% around 11:05 a.m., surpassing its previous record of March 28, of 8,253.59 points. The Amsterdam Stock Exchange is also at a peak, as is the European Stoxx600 index, while the main Italian, Spanish or Polish indices are close to their 2024 highs.
And on Wall Street, the three main indexes are only a stone’s throw from their record highs. In April, however, the Paris Stock Exchange twice moved more than 4.2% away from its record, the good mechanics of the beginning of the year having seized up.
Rate or late?
The cause, as has often been the case for three years, is inflation. In the United States, prices remain stubbornly on an upward trend, with little sign of change for almost a year (3.5% in April according to the CPI index). So much so that investors’ certainty that the American Central Bank will ease its pressure on the economy in 2024 is now shaken. Interest rates on government loans skyrocketed in April, going from 2.79% to 3.12% for the French 10-year, a movement which penalizes other financial assets such as stocks.
The month of May partly swept away these doubts: during its meeting, the American Central Bank confirmed that there was no question of further raising key rates, its main tool for trying to regulate inflation, and that the next move would be downward. Then, US employment data on Friday May 3 and Thursday May 9 showed a cooling of the labor market, a positive indicator for the US Central Bank.
Another positive factor, oil prices fell significantly (-9% on the barrel of Brent from the North Sea) following reaching their highest of the year in April. In Europe, the European Central Bank has made it clear that it intends to lower rates at its next meeting in June, a hypothesis that investors also consider credible for the Bank of England. The Bank of Switzerland and Sweden have already taken the plunge. “We are very optimistic regarding rate cuts, which is very good for stocks,” confirms Florian Ielpo, head of macroeconomic research at Lombard Odier IM.
Economic recovery
Excluding monetary policy, economic dynamics tend to move in the direction of investors. In the United States, where growth was strong in 2023, the slowdown in activity is rather well received because of its implications for the central bank. In Europe, markets are applauding indicators that show economic recovery following several quarters where the euro zone was close to recession, and the United Kingdom fell into it.
April activity indicators for the euro zone (PMI) are improving, and on Friday, the British Office for National Statistics showed that the country’s gross domestic product increased by 0.6% in the first three months of year, even more than analysts’ expectations. The data in China also portends a tremor, which bodes well for leading French companies.
The period for publishing company results was also considered good by analysts, despite initial fears regarding the economic slowdown. In France, Safran, Schneider Electric, Saint-Gobain, Thales, L’Oréal, Legrand, Michelin and TotalEnergies have recently broken their stock market valuation record or are very close to it.
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