The Paris Bourse (+1.35%) outperformed other European markets by 2 lengths, thanks to LVMH (+5%), which dragged Hermès (+3%) in its wake: the CAC40 broke back through the 8,000 mark in a big way.000 to reach 8,040, while the Euro-Stoxx50 gained just 0.7% to 4,950 (slowed by ASML's -4.5% fall), with Frankfurt and London gaining just +0.6%.
Indices seem unaffected by the reappearance of a strong sell-off in bonds since the beginning of April, reinforced by Jerome Powell's latest comments, which seem to rule out the prospect of a rate cut in June and suggest that only 2 easings would be on the agenda in 2024.
Rates are therefore likely to remain above 5.25% for another 6 months, a zenith that is synonymous with ever-increasing debt servicing costs.

With economic indicators in the US surprisingly on the up, investors are focusing on the resilience of the economy, which would offset the disappointment on the money market front.

Investors want to continue believing that yields - now at their highest level for 15 years - will cause only limited damage to the real economy.

The surge in yields on US ten-year Treasuries above 5% last October (the US 2-year is back in this zone, at 4.9700%) had, for the record, resulted in a consolidation phase for the world's stock markets.

Ten-year paper, which had reached five-month highs yesterday, is currently stabilizing at around 4.66%, a level comparable to that seen at the end of November.
On the European bond market, benchmark yields are easing slightly: the ten-year German Bund is down slightly (-1Pt) at around 2.478%, our OATs are down -1.1Pt at 2.9900%, while Italian BTPs are doing better, down 4Pts at 3.8700%.

Investors also want to focus on the corporate earnings season, which is currently in full swing.

Dutch semiconductor giant ASML reported unsurprising first-quarter results this morning and confirmed its annual forecasts, but announced a 5% increase in its dividend: sales were disappointing, however, and the stock lost as much as -5%.

The economic agenda, on the other hand, looks relatively quiet.

Final eurozone inflation figures for April were published this morning. According to Eurostat, it stood at 2.4% in March, versus 2.6% in February, thus confirming its flash estimate for last month, while the European Union's figure fell from 2.8% to 2.6% month-on-month.
On the FOREX, the Euro gained 0.2% to 1.0640, while the $-Index fell by -0.1% to 106.25.
Brent crude oil corrected by -1.2% to $89 a barrel, gold remained stable at $2,380 an ounce, while silver held steady at $28.5 an ounce.

In the UK, inflation eased to 3.2% annualized in April, from 3.4% in March, paving the way for a future rate cut by the Bank of England.

On the French stock front, Oddo BHF reiterated its 'outperform' rating on LVMH (+5%) with a price target raised from 835 to 857 euros, suggesting a 12-month upside potential of around 10%, the day after the world's number one luxury goods company reported its quarterly results. LVMH posted sales of €20.7 billion in the first quarter of 2024, with organic growth of 3% (-2% on a reported basis).

Copyright (c) 2024 All rights reserved.