The Paris Stock Exchange marks a time when bond yields are gaining strength again

Posted on January 2, 2024 at 12:30 pm.Updated January 2, 2024 at 12:32 p.m.

The initial development of the Paris Stock Exchange is no longer current at noon. The Cac 40 is up 0.04% at 7,540 points versus +0.89% at the session high. Admittedly, the first session of 2024 is not synonymous with happy news. Chinese markets ended in the red this morning after official data released over the weekend showed industrial activity fell at the sharpest pace in six months, again pointing to a weak recovery in the country.

The oil market continues to live to the rhythm of the turmoil in the Red Sea, which raises concerns about the disruption of oil supplies. Iran sent a warship to the area, which passes through 12% of the world’s trade transit, in response to the US military’s bombing of three Houthi ships, which Washington said were trying to intercept a container ship belonging to the Danish carrier Maersk. Ten rebels died. Since the beginning of the conflict between Israel and Hamas in Gaza, the Houthis, a Yemeni group backed by Iran, have stepped up attacks in the Red Sea against ships they believe are linked to the Jewish state.

Any escalation of conflict in the region will certainly increase Brent’s risk premium ”, responded Neil Beveridge, chief analyst at Bernstein. A barrel of Brent crude and US light crude gained more than 2% to $78.8 for the former and $73.2 for the latter. This move allows the energy giants to gain points in the stock market this Tuesday. Shares in TotalEnergies rose 2% in Paris, BP rose 1% in London and Eni rose 1.7% in Milan.

Bond yields are rising and banks are taking advantage

A move that does not benefit Maurel & Prom. The group lost 4.8% after Gabon’s transition president, General Brice Clotaire Oligui Nguema, announced during his wishes on December 31 that the state would buy the company’s exploration and production company in the name of a pre-emptive right. Assala Energy, whose acquisition the French oil company was still finalizing. Purchased for 730 million euros by the Carlyle fund, Maurel & Prom was to become the leading operator in Gabon.

Pernod Ricard and luxury groups are also in the red, suffering from the continued poor health of the Chinese economy. LVMH, Kering and Hermès fell 0.75% to 1.3%, while the spirits group fell 2.7%.

Société Générale (+3.3%), followed by TotalEnergies and Crédit Agricole (+1.9%) recorded the biggest increase in the Cac 40. Bank stocks are supported by a rise in bond yields, with the yield on the 10-year German Bund up five basis points and its US equivalent up seven points after falling sharply in recent months on the prospect of central banks cutting rates this year. measure of size in the face of falling inflation

Investors now appear to be a little more cautious, questioning the ability of those in charge to introduce the much hoped for significant monetary easing. The U.S. Federal Reserve is currently forecasting only three rate cuts this year, compared to the six that the market expects, and the European Central Bank has yet to officially address the issue. Traders are betting on 158 basis points of ECB easing in 2024, down about 10 points from last week. The rise in oil prices this Tuesday, reviving inflation fears, probably has nothing to do with it.

The manufacturing PMI index is barely recovering in the Eurozone

The rest of the session will be enlivened by the release of the final results of the US manufacturing PMI surveys.

In the eurozone, they showed that activity recovered slightly from 44.2 to 44.4 in December. ” The manufacturing sector continues to wallow in sharp decline. The survey points to a significant decline in activity and new orders, with the decline in sales slowing only slightly from November’s sustained pace. Weak demand reflects the current economic situation (…) Survey data paint a grim picture of industrial conditions in the eurozone’s four biggest economies. Spain recorded the smallest decrease, followed by Italy and Germany. France carried a red lantern at the end of the year, its manufacturing sector experienced the sharpest decline ”, commented Cyrus de la Rubia, Chief Economist of the Hamburg Commercial Bank.

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