The Paris Bourse (-0.1% to 7,360) is inexorably climbing back towards its all-time highs, with the CAC40 rallying spectacularly from a low of 7,270 this morning.

Thursday's session saw the Parisian index set a new intraday record, topping out at 7.387 points... again very close, with a best-ever close validated at 7,377Pts.
The CAC40 closes a 20th week of gains (a 5th positive trading month in a row, with February ending +5%) with a weekly score flirting with +3%. The CAC40 'GR', which gravitates above the 21,600 mark, has posted +14% since January 1.
The Euro Stoxx50 also reversed course, dropping from -1.1% to -0.25%, but only gaining +1.6% on a weekly basis: this underperformance reflects the lesser impact of luxury goods stocks on overall performance.

Wall Street is in the process of erasing its initial decline (the S&P500 is still down -0.4%, but the Nasdaq and Dow Jones are positive by +0.2%).
Buyers are back in control, for essentially technical reasons, as the "3 Witches" session rounds off a still very bullish month of February, with the 5th monthly trading session ending in the green.

The mood in New York appears less euphoric, following inflation figures that have fuelled fears about the evolution of the US Federal Reserve's monetary policy.

Producer prices rose by more than expected in January (+0.7%), driven by energy costs, which seems to be putting off the prospect of a rate cut by the Fed.
But there is some reassurance to be found in US import prices: they fell by 0.2% last month, following a 0.1% decline in December 2022, while export prices rebounded by 0.8% in January, following a 3.2% drop the previous month.

According to the Labor Department, the 12-month change in US import prices showed an increase of 0.8%, both gross and excluding petroleum products, while export prices rose by 2.3% (+1.7% excluding agricultural products) in January.
The week will end with the publication of a figure that will not upset the stock market (or bond market) landscape: the Conference Board's index of leading indicators fell by 0.3% in January (after -0.8% in December -revised from -1%- and -1.1% in November), i.e. exactly at the level expected by consensus.

American investors don't seem to know which way to turn, torn between the preferred scenario of a "soft landing" for the economy and the less promising one of overheating prices that would justify a still restrictive policy.

"One fear chases another", explains Bruno Cavalier, Oddo BHF's chief economist. In recent weeks, the risk of recession seems to have receded, particularly in the United States", he points out.

"So what's the problem? It's that inflation, apart from in China, remains too high and is moderating only slowly", he points out.

As a direct consequence, some strategists are beginning to raise the prospect of a possible 50 basis point Fed rate hike at the end of the March meeting.

As a further backlash, expectations for the US central bank's 'terminal' rate are now at their highest level ever, at close to 5.3% in July.
As for leading indicators, expected in the afternoon, for the past six months they have evoked the prospect of a recession, which seems perpetually belied by the strength of the US labor market.

'A recession is characterized above all by a fall in employment. Nothing of the sort has happened yet", reminds Bruno Cavalier at Oddo BHF.

Bond markets ended the week on a slightly negative note, as our OATs eased -4pts to 2.903%, Bunds erased -3pts to 2.4500% and Italian BTPs -4pts to 4.29%.

T-Bonds came as an unpleasant surprise, tightening +4.3pts to 3.886% and moving inexorably closer to 4.00%.

In corporate news, Air France-KLM reports positive net income of €0.73 billion for 2022, an improvement of €4.02 billion on 2021, with an operating margin of 4.5%, higher than 2019 (4.2%) despite a sharp rise in fuel prices.

Hermès International reports a 38% increase in net income, group share, to 3.37 billion euros for 2022, and an operating income before non-recurring items of 4.7 billion, or 40.5% of sales, compared with a margin of 39.3% the previous year.

EDF reports a net income, group share, of -17.9 billion euros in 2022, and a sharp decline in EBITDA (-5 billion euros). However, sales rose to 143.5 billion euros, buoyed by electricity and gas prices.

Finally, Safran reports adjusted sales of 19 billion euros for the 2022 financial year, up 25% on 2021 and +15.8% on an organic basis. Adjusted net income (Group share) is up 55% to €1,178 million, and adjusted diluted EPS is up 55% to €2.68.


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