After 11 days of gains in the first 13 sessions of the year, the Paris Bourse corrected rather sharply on Thursday (-1.8%) as doubts resurfaced about the speed of monetary policy easing by central banks: the ECB (Lagarde) and the FED (several members spoke) have been sending the markets - since Davos - a message of firmness and determination in their fight against inflation.
The session was not looking good, with Tokyo down -1.5% this morning, the Dow Jones -1.8%, the Nasdaq -1.2% and the S&P500 -1.6% last night.
In Europe, the Euro-Stoxx50 lost -1.7%, the Frankfurt stock exchange -1.6%, and Paris was the red lantern with -1.8% at 6,955.

Some strategists feel that the markets have moved too fast at the start of the year, while the latest indicators have reinforced the preferred scenario of a soft landing for the economy.

The markets are obviously trying to anticipate a recovery before the slowdown has happened", points out Marcus Poppe, Global Equity Portfolio Manager at DWS.

In particular, the professional believes that the valuation of US equities remains too high, but that the future looks a little brighter in Europe, leading him to overweight European equities.

Kiplink Finance adds: "At this stage, if a consolidation were to take place at this valuation level of 7085 or 7140 points on the CAC, we believe that the impact would remain limited on the current trend.

"A 50-100 point retracement would be quickly absorbed, allowing the CAC 40 index to resume its upward trajectory", warns the management company.

Investors took note this Thursday of a new series of economic statistics, including the latest figures for the US housing sector.
The Commerce Department reported a 1.4% decline in US housing starts last month, to 1,382,000 at an annualized rate, a level however slightly higher than economists' expectations.
US building permits - supposed to foreshadow future housing starts - also slumped, by 1.6% to 1,330,000 at an annualized rate.330,000 annualized in December, slightly missing the market consensus.
With access to financing tending to dry up, indicators for the residential construction sector, which have been turning red for many months, are likely to remain on a downward trend.

Another figure of primary interest to the Fed: the labor market remains extraordinarily buoyant, with weekly jobless claims in the US falling by 15,000 in the week to January 9, to 190,000 from 205,000 the previous week, according to the Labor Department.
The four-week moving average - considered a better indicator of the underlying trend in the job market - shows a week-on-week decline of 6,500 to 206,000.

Finally, another surprise, in complete contrast to the poor Empire State index published the previous day, the Philly Fed index showed an upturn in manufacturing activity in the northeastern US: the index rose to -8.9 after falling to -13.7 in December, whereas economists were forecasting a more limited recovery, to around -11.
This is the seventh time the index has fallen below zero in the last eight months.
The employment sub-index improved significantly, rising from -0.9 to +10.9 month-on-month, as did the new orders sub-index, which improved but remained in negative territory at -10.9.

Bond markets are taking advantage of all the above to consolidate: our OATs are up +8pts to 2.516%, Bunds +7.5pts to 2.08%, Italian BTPs +2pts to 3.826%.
US T-Bonds fared rather well, with +3Pts to 3.407%.
Little movement on Forex, with the Euro shedding 0.2% against the $ to 1.0820.

On the results front, US FMCG giant Procter & Gamble will publish its accounts at midday, before being followed later in the evening by video-on-demand specialist Netflix.

The results season will be particularly lively next week, with publications from Boeing, Intel, LVMH, Microsoft and Tesla.

In news from French companies, Dassault Systèmes announced on Thursday that it would be joining forces with IBM to accelerate the sustainable transformation of industry players through the adoption of 'virtual twins'.

Arkema announced that it had signed a long-term agreement with Engie, starting January 1, 2023, for the supply of 300 GWh/year of renewable biomethane in France, one of the largest private biomethane contracts in Europe to date.

Nexans announced on Thursday that it would be stepping up its efforts to combat counterfeiting of its cables by teaming up with Austria's Authentic Vision. Under the terms of the partnership, the French group will adopt the patented 'Meta-Anchor' holographic labels.

Lastly, Edenred announced that it has entered the capital of Betterway, a French fintech founded in 2019 and a pioneer in the provision of corporate mobility passes, with which the group has already been a commercial partner since September 2022.


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