The Paris stock exchange extended its gains after a hesitant start this morning: the CAC40 index (+0.85%) climbed toward 8,100, seemingly poised to fill the "gap" at 8,119 from November 17 (with no resistance expected tomorrow as Wall Street will be closed).
The benchmark index is buoyed by gains from Société Générale (+2.2%), STMicroelectronics and L'Oréal (+1.8%), as well as AXA and Veolia (+1.4%).
Momentum is also "vigorous" across Europe, with the E-Stoxx50 up 1.4% to 5,650 as U.S. indices notch a fourth consecutive gain, driven by increasingly clear expectations of a Federal Reserve rate cut in the United States on December 10 (the same expectations that propelled the S&P500 to 6,900 on November 12).
Wall Street has gained 4.4% over the four sessions leading up to Thanksgiving, with the Nasdaq-100 confirming its move back above 25,000, up 0.9% to 25,240. The S&P500 shows a similar advance, at 6,820, and could close the "gap" at 6,830 from November 13 before 10 p.m. tonight (it has also moved back above its 50-day moving average at 6,750).
The Dow Jones is also up 0.75%, heading toward 47,450 and closing the "gap" at 47,411 from 11/13.
Recent U.S. data--durable goods orders rose by 0.5% as expected--have reinforced the likelihood of another Federal Reserve rate cut on December 10, an outcome now considered credible by nearly 83% of traders, according to CME's FedWatch tool.
With risk appetite returning, market stress is easing and the volatility index "VIX"--often dubbed the fear barometer--has dropped below the 20-point threshold, falling another 4.8% toward 17.70.
"Once again this year, sellers find themselves on the wrong side of the markets," notes Michael Brown, strategist at Pepperstone. "The U.S. economy remains solid, earnings growth is robust, the business climate is calming, and monetary policy remains accommodative: a combination of factors clearly driving risk assets higher," he adds.
"Add to that a very favorable seasonal pattern, flows driven by the fear of missing out on the rally (FOMO of the 'Santa Claus rally') supporting the resumption of share buybacks, and you have an environment that would be difficult--if not unwise--to counter for now," Brown concludes.
Buying is all the more strategic this Wednesday as Wall Street prepares for a four-day holiday break for Thanksgiving (there will be a half-session this Friday the 28th, which also coincides with the end of the calendar month).
On the bond market, the yield on France's 10-year OAT remains stable at 3.41%, with the Bund of the same maturity at 2.683% (+1 basis point), and Italian BTPs flat at 3.405%. Across the Atlantic, the renewed "risk-on" sentiment is putting some pressure on T-Bonds, with the 10-year yield rising 1.5 basis points to 4.014% and the 30-year up 0.5 to 4.660%.
Brent crude is down 1.2% to $61.75 and is unresponsive to the latest U.S. oil inventory data: figures from the U.S. Energy Information Administration (EIA) show that U.S. crude oil stocks rose by 2.8 million barrels to 426.9 million barrels during the week of November 17.
Specifically, the agency reports that distillate stocks--including heating oil--also increased by 1.1 million barrels (stable the previous week), while gasoline stocks rose more sharply, up 2.5 million barrels compared to the previous week.
Finally, the EIA notes that refineries operated at 92.3% of their operational capacity (+2%) during the same week, with average production of 9.6 million barrels per day.
On the Forex market, the euro is up 0.25% against the greenback, trading around $1.1595, while the pound is up 0.55% against the dollar following the UK budget announcement (an increase of nearly £30 billion in tax revenues).
In French corporate news, Dassault Systèmes announced it has deepened its partnership with Mistral AI, through which the enterprise software designer will now offer "sovereign" AI services for regulated sectors and public administrations in Europe.
Solutions30 announced an extension of its strategic partnership with Spirii, a provider of platform solutions for electric vehicle charging, to accelerate the deployment and maintenance of charging stations across Europe.
Finally, Compagnie des Alpes announced that the bid submitted by its subsidiary, Société d'Aménagement de La Plagne (SAP), has been selected by the Intercommunal Syndicate of Grande Plagne (SIGP) following a competitive process.
As a result, the company has been awarded a renewed Public Service Delegation (DSP) contract covering the development and operation of the La Plagne ski area (lifts and slopes), as well as management of intra-resort shuttles and the bobsleigh track.
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