he Paris stock market remained a little sluggish for a long time this morning (around 8,045 points), just enough to finish the week in the green by +0.1 or +0.2%... but the market suddenly changed its face after the publication of the 'PCE' index.

The CAC40 accelerated and gained +1.1% to over 8,105Pts, well helped by Saint-Gobain, which grabbed 6% the day after its quarterly results. Kering also regained some color (+4%) after its recent disappointments, while Teleperformance completed the podium of the CAC's best performers with a gain of 3%.
On Wall Street, the upside was there for the taking: the S&P500 gained +1% and the Nasdaq +2%.

While the earnings season is in full swing on both sides of the Atlantic, the main event of the session took place at 2.30pm with the release of the US PCE inflation index, which is likely to influence future monetary policy decisions: it came in at +2.7% in March, compared with 2.5% in February, with the underlying rate (excluding energy and food) holding steady at 2.8% month-on-month.

U.S. inflation is therefore slightly higher than expected by economists, who at Jefferies, for example, were anticipating rates of 2.6% on a reported basis and 2.7% on an underlying basis.
The Commerce Department also reported that US household spending rose by 0.8% in March compared with the previous month, while incomes rose by 0.5%.
US consumer confidence deteriorated more sharply than initially estimated in April, the final results of the University of Michigan's monthly survey showed on Friday.

The confidence index finally came in at 77.2, below the first estimate (77.9) and down sharply on the 79.4 level reached in March.

Households' assessment of their current situation deteriorated the most, to 79 from 82.5 last month.

The expectations component fell to 76 this month from 77.4 in March.

But Wall Street, as on the previous day, is focusing on the quarterly results, and is being seduced by pleasant surprises such as Microsoft (+2.6%) and Alphabet (+10.5%).

Tension is unexpectedly easing on the bond markets, with the US 10-year at 4.655% (-5pts), Bunds at 2.563% (-6pts) and OATs at 3.050% (-7.2pts).

The estimated probability of a rate cut in June, which stood at almost 64% a month ago according to CME Group's FedWatch tool, has fallen back to around 12% today.

In view of this barometer, expectations of a rate cut in September have fallen back to 44%, on a par with the scenario of a continuation of the 'status quo' (40%).

Awaiting the release of the PCE, the yield on 10-year US Treasury bonds eased slightly to 4.68%, after breaking through 4.7% yesterday, its highest level since November.

A few months ago, long yields had fallen in anticipation of an earlier monetary pivot", points out Oddo BHF.

Now that the market is pushing back the pivot, long yields have fallen back. The sectors most sensitive to financial conditions are likely to suffer again", adds the private bank,

Note that oil has risen sharply in 24 hours (+1.5%) and Brent crude is trading at around $89.5, which may explain Total Energie's rebound (+2.5%).

In French company news, Saint-Gobain last night reported Q1 sales of 11.4 billion euros, down 5.8% on a like-for-like basis, affected by the downturn in new construction in Europe but buoyed by growth in the Americas and Asia-Pacific. Saint-Gobain asserts that it is aiming for a double-digit operating margin in 2024, for the fourth year running.

This morning, Safran reported sales of 6.22 billion euros for the first three months of 2024, up 18.1% on a reported basis and 19.1% organically, with double-digit growth in all its activities.

Airbus reports consolidated adjusted Ebit - a measure of its commercial performance - of 577 million euros for the first three months of the year, compared with 773 million euros a year earlier.
Sales rise 9% year-on-year to 12.8 billion euros on the basis of 142 commercial aircraft deliveries, compared with 127 in the first quarter of 2023.

On Friday, TotalEnergies reported a 22% decline in first-quarter adjusted net income, while citing a "solid" performance in line with its objectives for fiscal 2024. The group posted adjusted net income of $5.1 billion for the first three months of the year, compared with $6.5 billion a year earlier.

Finally, URW reported first-quarter sales of 942.8 million euros, up 3.7% on the previous year. On a like-for-like basis, sales were up +10.5%.

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