Posted on December 18, 2023 at 5:39 pm
A week before Christmas, today’s trend was towards profit-taking on the Paris Stock Exchange, at the tail end of a stock market rally that began in late October with the prospect of a central bank turnaround next year. they are gradually abandoning their restrictive policies and starting to lower their interest rates.
After five straight weeks of gains that saw it gain 7.6% and reach an all-time high, the Cac 40 fell 0.37% today to close at 7,568.86 points.
Japanese steel giant buys US Steel
The Stoxx index linked to the basic resources sector posted the strongest gain in Europe, with ArcelorMittal gaining more than 5%, thanks to the merger of the two steel heavyweights. The symbol of United States industrialization, US Steel, will be bought by Japanese competitor Nippon Steel for $14.9 billion including debt, creating the world’s second largest steel group and the first outside China. Shares of US Steel jumped 27% on Wall Street.
The Nasdaq, Dow Jones (+0.3%) and S&P 500 (+0.5%) rose a few fractions after notching a seventh straight week in the green on Friday, helped by the Federal Reserve’s verdict on Wednesday. The Fed currently expects three rate cuts in 2024, but the market is thinking bigger and is counting on 5, even 6 cuts. That’s too much, several members of the U.S. central bank said. John Williams, Raphael Bostic, Austan Goolsbee and again this Monday Loretta Mester warned that financial markets are getting carried away by predicting rate cuts as early as March. “The next step is not knowing when to cut rates, even though that’s where the markets are. The question is how long monetary policy should remain restrictive. Markets have gone straight to a rapid normalization, which I don’t foresee.”said in an interview with Financial Times Loretta Mester, president of the Cleveland Fed and a voting member of the committee next year.
Ahead of the Christmas break, investors will be paying particular attention to Friday’s release of the US PCE index of personal consumption expenditures, with a slight slowdown expected. “If the data is in line with expectations, it would put six-month annualized inflation slightly above the Fed’s 2% target, keeping the Fed in check. However, this lull in inflation can be attributed to the drop in oil prices. While the central scenario assumes limited potential increases in oil prices, any reversal of momentum could contain the prospect of a rate cut. ”, Swissquote analyst Ipek Ozkardeskaya noted in a note this morning.
Oil rises after Red Sea attacks
Oil prices are indeed rising this Monday. Several global shipping giants, including Maersk and CMA CGM, and oil company BP have announced in recent days that they are suspending their ships’ passage through the Red Sea due to an increase in attacks in the area by Houthi rebels. He warned that in response to the war between the Jewish state and Hamas in Gaza, he would target ships sailing off the coast of Yemen with links to Israel. This renewed tension mechanically raises oil prices. TotalEnergies rose more than 1% at Cac 40. Vallourec was the best performer in SRD.
“Given the importance of the Red Sea and the Suez Canal as a key transit point for crude and natural gas, these suspensions mean that cargo is forced to make a long detour through the Horn of Africa, which will result in significant additional supply costs for businesses. chains, as well as significant inflationary effects”.comments Michael Hewson of CMC Markets.