he Paris stock market is in a state of euphoria on the eve of the "4 Witches" technical session: the CAC40 is now up by more than 1.3%, topping the 7,320 mark, a pivotal threshold since the end of March.

As a result, the week is now positive by +1.7%, and the September stock market term ending tomorrow at 4pm would be positive by +2% if we were to leave it at that.

Investors are very pleased - not with the 10th rate hike to 4.00% - but with the ECB's very transparent communication on the fact that it could well be the last.
Christine Lagarde hammered it home at a press conference: current rates are set to be maintained until inflation convincingly approaches the 2% target (which could be reached in early 2026.

The Euro-Stoxx50 is now up +1.4% at 4,285 and the London Stock Exchange stands out with a surge of +2%: nothing to do with the ECB since the UK is not concerned.
The FT-100 is in fact being driven by mining stocks, which are enjoying their best session of the year, with Anglo-American +8.3%, Rio Tinto +5.2%, Glencore and BHP Group +4.6%.
Wall Street also seems to be back in full risk-on mode, with the Dow Jones at +0.7%, and the S&P and Nasdaq at +0.75%.

The European Central Bank (ECB) took advantage of the meeting to update its forecasts for 2023, 2024 and 2025... and there are no 'pleasant surprises', as growth is revised downwards over the next 2 years and inflation upwards in 2023 and 2024 to 5.6% (vs. 5.3%) and 3.2% (vs. +3%) respectively, but downwards in 2025 to 2.1%.

However, core inflation (excluding energy) is revised slightly downwards to 5.1% on average in 2023, 2.9% in 2024 and 2.2% in 2025.
Finally, "in view of the increasing impact of monetary tightening on domestic demand and the slowdown in international trade", the ECB has significantly reduced its economic growth projections to 0.7% in 2023, 1% (only) in 2024 and 1.5% in 2025.
Christine Lagarde notes that activity in the 'services' sector is down sharply, that banks are lending less readily, that corporate demand is down (-3% year-on-year vs. -2.2% at the end of the 1st half), and that lending to individuals is down (-1.7% since January 1, -0.8% over June/July/August).
The 'M3' money supply (including credit) is contracting by -0.5% this year, against food inflation that remains above 6%.

One figure was eagerly awaited in the USA: retail sales in the US rose by +0.6%, well above the 0.2% expected in August, according to official statistics published on Thursday.

The Commerce Department reports that the rise in fuel prices accounted for a large part of August's +0.6% (which is calculated in terms of the volume of money spent.... and it took 7% more to travel the same number of kilometers)

Excluding automobiles and fuels - the component of the statistics that best corresponds to the measure of consumption used to calculate GDP - retail sales, however, rose by only 0.2%.

Auto sales rose by 0.3% in August compared with July, while gas station sales climbed by 5.2% as a result of higher gasoline prices.

This latest sign of the resilience of the US economy could prompt the Federal Reserve to continue on the path of monetary tightening at the end of its meeting next week.
All the more so as producer prices in the USA rose by +0.7% (instead of +0.2% expected) due to the recent rise in oil prices ($90.1 for WTI, a new annual record), which has an unfavourable impact on production costs.

The number of jobless claims in the USA rose by 3,000 in the week to September 4, to 220,000 according to the Labor Department, compared with 217,000 the previous week (a revised figure from the 216,000 initially announced).

The four-week moving average - considered to be a better indicator of the underlying trend in the job market - showed a drop of 5,000 in the number of registrations compared with the previous week, to 224,500.

European bond markets are easing after the ECB (-8pts on OATs to 3.118%), with Bunds down -7pts to 2.582%.
US T-Bonds are moving in the opposite direction with +1.2pts to 4.263%, weighed down by producer prices and rising consumption.

The dollar is taking advantage of the wide gap in EU/US yields to climb +0.7% towards 1.0655, as chartists consider that an important support has been broken by the euro.
The 1st listing of ARM, valued at $50 billion, has been postponed, but should be at the top end of the IPO range.

In news from French companies, Assystem reports net income of 21 million euros for the first half of 2023, down from 32.7 million a year earlier, and operating income down 4.3% to 15.7 million, representing a margin down 1.2 points to 5.6%.

Esker reported net income down 26% to 7.5 million euros for the first six months of 2023, with operating profitability of 11.2% on sales of almost 87.9 million, up 15% (+16% at constant exchange rates).

Finally, TotalEnergies announced the launch of a tender for the supply of 500.000 tonnes per year of green hydrogen, so as to avoid the emission of around five million tonnes of CO2 per year in its European refineries by 2030.

TotalEnergies also announced that it has signed an agreement with Air Liquide for the long-term supply of green, low-carbon hydrogen to its Gonfreville platform, to reduce the site's annual CO2 emissions by up to 150,000 tonnes per year.

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