The Paris stock market continues the rebound it began yesterday, with strength and determination: the CAC40 is up 1.5% (to 7,120), led by banks and insurers (+4%), as concerns about the health of the global financial system ease.
Risk-on is back, as evidenced by the sharp fall in bond markets (OATs are down +15 to +16 basis points, Bunds +18 basis points to 2.28%... and US T-Bonds +11 basis points to 3.585%).
April's stock market performance is already positive by +3%, which in 48 hours erases half of the ground lost in March, and the annual performance exceeds +10% once again.
The rebound exceeds +5% in 24 hours (and in 12 hours of continuous trading), with the CAC40 returning to within 4% of its historic highs of March 6.

Today's rebound is not specifically linked to the rejection of the motion of censure against the 64-year pension law (the Euro-Stoxx50 posted the same gain as the CAC): no reaction from OATs or futures on the CAC40, so no "relief" even though the government said it feared a downgrading of French debt by the rating agencies in the event of rejection.
On Wall Street, gains remained modest (+0.5%) despite hopes of a resolution to the "Fist Republic" problem: the FED is said to be willing to finance the guarantee of all deposits in US regional banks, thus removing a major source of stress (risk of bank-run and cascading bankruptcies).

On the stats front, a surprise in the US was the jump in second-hand home resales, up 14.5% in February (to 4.58 million units, according to the NAR), against expectations of +5.5%: a surge that may have been due to a one-off easing in interest rates in January, which may have re-motivated buyers last month.
This rebound puts an end to 12 consecutive months of decline: it essentially reflects the market's dynamism on the country's West Coast.

In detail, sales rose by 4% in the Northeast and 13.5% in the Midwest, with gains of 15.9% and 19.4% respectively in the South (Florida) and West (California).
The median house price fell slightly by 0.2% year-on-year to $363,000.

In Europe, new car sales rebounded by +12.2% in February: the base effect is favorable and will be even more so in March, since everything had frozen in March 2022 with the start of the war in Ukraine.

However, the ZEW barometer of German business sentiment fell much more sharply than expected, to 13 from 28.1 last month.
Christine Lagarde, President of the ECB, assured us yesterday that "financial tensions could temper demand and do some of the work that would otherwise have been done by a restrictive monetary policy: without these tensions, we would have indicated that further rate hikes were necessary".
In other words, the rate hike cycle may well be over, since restrictive policy is no longer necessary in view of the already tight financial conditions on the markets.

As one London trader summed up yesterday, 'the risks surrounding the banking system have become more important than monetary policy objectives'.

While growing fears about the banks have fuelled market volatility in recent days, investors are now awaiting announcements from the US Federal Reserve (Wednesday evening at 7pm), which will be followed by a press conference from its Chairman Jerome Powell.

According to CME Group's FedWatch barometer, investors' estimated probability of a 25bp rate hike hovers around 77%, while only 23% of investors expect no change.

A 25bp rate hike by the Fed versus +50bp by the ECB weakens the Dollar against the Euro: it loses -0.5% towards 1.07750E... but the Dollar Index as a whole is down just -0.1%).

In corporate news, banks are leading the way (Sté Générale and AXA are up 3.8 to 4%), but Renault is in the lead with +4.1%.
Mr.Bricolage shares gain nearly 4% in Paris after the announcement of a planned purchasing partnership with the UK's Kingfisher.

Air Liquide announces that it will invest around 60 million euros to modernize two air separation units (ASUs) that the French industrial group operates in the Tianjin industrial basin in China.

Colas announced on Tuesday that it is investing in French start-up XXII to accelerate the use of computer vision in artificial intelligence (AI).

Finally, Sopra Steria announced a conditional agreement to launch a public tender offer for all Ordina shares at a price of 5.75 euros per share (excluding the proposed dividend), representing a premium of 36% on the closing price on March 14.

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