The Paris Stock Exchange has emerged as the front-runner among European markets following the U.S. Federal Reserve's decision to continue its cycle of interest rate cuts. The CAC40 is up by 0.8% (approaching 8,085 points), while Brussels slips by -0.5%, London remains flat, and Frankfurt gains 0.55%.
The 0.85% rise in the E-Stoxx50 owes much to French stocks, particularly Schneider and St Gobain (both up 3.8%), followed by CapGemini and Carrefour (up 3.1%).
The Fed's unsurprising announcement was widely welcomed on Wall Street last night, until Oracle soured the mood with disappointing quarterly results. U.S. indices reopened mixed, though all-time highs remain within reach (just 0.1 or 0.2% away).
The session was marked by Oracle's plunge of nearly -15%, dragging the S&P 500 down by -0.3% and the Nasdaq by -0.7%. The Dow Jones, with a gain of +0.55%, is in record territory after narrowly missing a new high the previous day.
On the data front, weekly jobless claims in the United States rose by 45,000 last week, according to figures released Thursday by the Department of Labor, while economists had expected an average of 220,000 claims.
The four-week moving average stands at 216,750, compared to a revised 214,750 the previous week.
The number of people regularly receiving benefits, however, fell to 1.838 million.
At the conclusion of its final monetary policy meeting of the year, the Fed cut its key interest rates by a quarter point as expected, but also lowered its inflation forecast (2.5% versus 2.6%) and announced an immediate return to balance sheet expansion through Treasury Bill purchases.
While its chairman, Jerome Powell, did not adopt an especially dovish tone at his press conference, he also avoided sounding too hawkish, emphasizing that no one on the FOMC expects a rate hike scenario.
The institution also raised its growth forecasts, while noting a weakening labor market--a "goldilocks" scenario that could justify further credit cost reductions next year.
"The Fed will therefore continue its cycle of rate cuts, and next week's inflation and employment figures will determine the magnitude and timing of the move," commented Bastien Drut, head of strategy and economic research at CPRAM.
With the end of the year traditionally a favorable period for equities, the outlook now appears clear thanks to hopes for monetary policy, meaning December's window-dressing may regain momentum.
"As I've said before--and at the risk of repeating myself--we are currently facing one of the most bullish cocktails imaginable for risk assets," said Michael Brown, market analyst at Pepperstone.
"When you add in the fear of missing out (FOMO), ultra-favorable seasonality, and massive corporate buybacks, it's clear that the most obvious dynamic remains decidedly bullish," he added.
"I remain quietly confident that the S&P 500 can reach the 7,000-point threshold by the end of the year," the strategist asserted.
With the Fed hurdle now cleared, the S&P 500 appears poised to notch an eighth consecutive monthly gain in December, which would be a first in more than 25 years.
As expected, U.S. yields have fallen after the Fed's decision, with the 10-year note yield dropping 7 basis points to around 4.106%.
The dollar is declining against most currencies (an average of 60.45%) following the Fed's relatively dovish tone, allowing the euro to climb above 1.1745 against the greenback.
Oil prices are sharply lower after a smaller-than-expected decline in U.S. crude inventories. Brent is down 2.3% at $61 a barrel, while U.S. light crude (West Texas Intermediate, WTI) slides 2.6% to $57.2.
Risk appetite is nevertheless being curbed by Oracle's weaker-than-expected quarterly results, with the stock tumbling -14.6%.
"It's not just the earnings that are concerning, but especially the scale of Oracle's debt and its inability to reassure the market about its capacity to finance its massive investment projects," commented a trader.
