The Paris Bourse (+0.6% to 7,580) moderated its bullish frenzy of the early morning: shortly after the opening, the CAC40 had even briefly set a new all-time record at 7654 points.
The day's rise took place in larger volumes (E2.5bn vs. E1.3bn the previous day at 5pm), which means that some big hands are starting to lighten up, whereas at the start of the week, they were climbing in a vacuum, with no counter-sales.
The euro-Stoxx50 lost all of its early +1.2%, falling from a record 4,593 to 4,525 (weighed down by Munich-Re's -5% and Unicredit's -4.6%).
Wall Street continues its incredible bull run on the eve of the '4 Witches', which will crown the most 'unbelievably perfect' year-end rally of the 21st century, with 7 weeks of gains, zero retracement above 1% and a 'VIX' permanently back below '12' for the first time since mid-December 2019.
The Dow Jones (+0.3%) set a new record at 37,220, the Nasdaq-100 (+0.4% at 16,650) gained 52% since January 1, and the S&P500 (also +0.4% at 4,735) is just 1.5% off its all-time high of 4,800.

As widely anticipated by the markets, the U.S. Federal Reserve decided last night to keep rates unchanged, while opening the door to a 'pivot' in favor of monetary easing as early as next year (3 cuts, whereas the markets are now 'pricentering' the equivalent of 8 or 9 (including -50Pts), and 6 at the very least.

We see this as a strong signal that the Fed is starting to prepare the markets for rate cuts, depending on the economic data received", commented Danske Bank analysts.

This prospect is particularly clear from the CME's FedWatch barometer: investors now estimate the probability of a 25 basis point rate cut in March at over 80%, compared with less than 40% yesterday.

"The question is (...) no longer whether monetary policy will be eased, but when and how quickly", say the teams at Oddo BHF.

By favouring the scenario of a "soft landing" for the US economy (growth of +2.8% in 2024 according to the FED, while the OECD barely expects a third), Jerome Powell - the central bank chairman who confirms the "Goldilocks" scenario hoped for by Wall Street - has precipitated a general surge in stock markets, which were already trading at record levels.

Jerome Powell's "dove-like" comments led to a spectacular reaction in the bond markets, with the yield on 10-year Treasuries plunging to 3.9100% (-28pts in 24 hours), the first time this has happened since July, while the 30-year also fell by 11pts to 4.07%.

In Europe, Bunds plunged by -5pts to 2.119%, our OATs by -13pts to 2.648% and Italian BTPs by -15pts to 3.787% (and -25pts in 48H).

The ECB is also opting for a 'status quo' on rates at the end of its Governing Council meeting, scheduled for this morning.

Following the Fed's conciliatory announcements and in anticipation of a more neutral tone from the ECB, the euro is up +1.1% against the dollar to return to trade in the $1.100/euro zone, i.e. +2% in 24H.

At the close of its monetary policy meeting in Frankfurt, the Governing Council of the European Central Bank (ECB) considers that 'the key ECB interest rates are at levels which, if maintained over a sufficiently long period, will make a strong contribution to achieving' its medium-term inflation target of 2%.

It also decided to bring forward the normalization of the Eurosystem's balance sheet.

In the first half of 2024, it intends to continue the full reinvestment of principal repayments on maturing securities acquired under the PEPP.

The Board then plans to reduce the PEPP portfolio by an average of 7.5 billion euros per month in the second half of the year, and intends to end reinvestments under the PEPP at the end of 2024.

In terms of U.S. indicators, U.S. retail sales rose by 0.3% sequentially in November 2023, where consensus was expecting a slight decline, following a 0.2% drop the previous month (revised from an initial estimate of -0.1%).

The Commerce Department, which publishes these figures, states that excluding the automotive sector (vehicles and equipment), US retail sales rose by 0.2% last month, after remaining stable in October.

The Labor Department announced 202,000 new jobless claims in the USA for the week of December 4, a figure down by 19,000 on the previous week's revised figure (221.000, compared with 220,000 initially announced).

The four-week moving average came out at 213,250 last week, down 7750 on the previous week's revised average.

Finally, the number of people receiving regular benefits rose by 20,000 to 1,876.000 in the previous week, the most recent period available for this statistic.

In French company news, Atos (+6%) reports that Onepoint, its reference shareholder since November 1, has increased its stake to 11.4%, and that it intends to pursue a constructive dialogue with it, as with all its shareholders.

Air France-KLM (+8%) confirms its outlook for 2024-26 and sets targets for 2026-28, including a further increase in profitability with an operating margin in excess of 8%.

Bayer announced on Thursday the signing of a partnership with French start-up Iktos for the use of AI in the discovery and development of new crop protection products.

Finally, Dassault Systèmes and Dassault Aviation announced on Thursday that they would be deepening their collaboration, which will now encompass the maintenance, repair and overhaul (MRO) activities of combat aircraft.

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