Euphoria is back on the Paris Bourse with 45 minutes to go: the CAC40 climbs +1.4% to 6,855pts, smashing its December 13 high (6,815), while the Euro-Stoxx50 soars +1.2% to 4,010.
Wall Street has just accelerated sharply higher (Dow Jones and S&P500 up +1.7%) thanks to... bad ISM figures, somewhat unexpected (after the 'NFP'). bad (ISM) figures, somewhat unexpected (after the 'NFP').

Activity in the US services sector (ISM) proved to be well below expectations in December: it plunged from 56.5 to 49.6 last month, whereas economists were expecting a much less pronounced decline, to around 55.
This is the first time since May 2020, when the first US confinements took place, that it has fallen below the 50-point mark, indicating a contraction in activity.
In detail, the new orders component dropped to 45.2 from 56 in November, while the activity component fell to 54.7 from 64.7 the previous month.

There was also a surprise decline (-1.8%) in US industrial orders in November, according to figures published today by the Commerce Department.
Industrial shipments also fell, to -0.6%, compared with +0.2% the previous month.

Investors are clearly keen to see the glass as half-full, and demonstrated this at 2.30 p.m. with the NFP: of the 4 components of the employment report, they only wanted to retain the one they found reassuring: the moderation in US wages in December (which means less purchasing power, and mechanically less growth).

Wall Street had reopened strongly higher, with +1.2% on the Dow Jones and S&P500, +1% on the Nasdaq... before losing all or part of this advance within 20 minutes (the Nasdaq slipping back into the red), but the poor ISM reading for the tertiary sector turned everything around, with T-Bonds easing a spectacular 14pts to 3.58%.

Before the ISM, according to the CME Group's FedWatch barometer, the consensus was for 2 rate hikes of 25 points each in February and March, although a 50-point hike in February could not be formally ruled out, with an estimated probability of 41%: a final target of 5.25% seemed a reasonable assumption after the 'NFP'.

The US economy generated +223,000 nonfarm payrolls in December 2022, according to the Labor Department, a number slightly higher than market expectations (200/220,000 expected), but the unemployment rate eased a further 0.1 points to 3.5%, a sign of great robustness in the labor market.

The labor force participation rate remained more or less stable at 62.3%, a level that remains one point below that of February 2020, and average hourly earnings rose at an annual rate of 4.6%.

In addition, job creations for the previous two months were revised downwards by -21,000 to 263,000 for October and by -7,000 to 256,000 for November, giving a total revision balance of -28,000 for these two months.
The scenario of a continued restrictive Federal Reserve policy persists in the coming months.

'Employment is slowing but not falling, in a context of insufficient available manpower', point out the Oddo BHF teams.

In Europe now, seasonally-adjusted retail sales volume rose by 0.8% in the eurozone in November and by 0.9% in the EU, compared with October 2022, according to estimates from Eurostat, the European Union's statistical office.

In October 2022, the volume of retail trade had fallen by 1.5% in the eurozone and by 1.4% in the EU.

In addition to US employment figures, late this morning investors took note of consumer price figures in the eurozone for December: the decline in CPI confirmed the trend towards easing inflationary pressures in the region.

Yields on European government bonds have eased sharply since 4 p.m.: the 10-year German Bund has fallen by -110pts to 2.1980%, the OAT by -12pts to 2.7020%, and Italian BTP by -15pts to 4.18%.

The price of a barrel of oil rebounded by +1.2% to $79.8 (WTI gained +0.8% to $74.5), but was down by more than 7% over the week, due in part to fears about the health of Chinese industry.

In company news, Getlink reported that its Eurotunnel Le Shuttle passenger shuttle service under the English Channel carried more than 100,000 passenger vehicles between Folkestone and Coquelles over the end-of-year vacation period.

Stellantis announced the creation of Mobilisights, a business unit entirely dedicated to the growth of DaaS (Data as a Service) activities and the development and licensed distribution of B2B products, applications and services.

Eiffage announced yesterday that the consortium made up of Eiffage Métal, leader of the consortium, and EiffageConstruction, has won the contract awarded by STMicroelectronics to extend its production site in Crolles.

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