(CercleFinance.com) – The bullish rally propels, almost without surprise, the Paris Stock Exchange (+ 3.36%) on contact, then above 5,000Pts.
The CAC garners + 645 points in 9 sessions, without any retracement, i.e. a breathless pace of + 1.5% per session … first without volume for 7 sessions, then with volume for 48 hours, including 4.9 billion euros this Wednesday , in an atmosphere of panic buying.
More surprisingly, the CAC aligned this Wednesday a 7th bullish opening gap in 8 sessions, which is a great historic first.
The qualifier of ‘crash’ on the rise could apply to Frankfurt which displays more than 10% increase in 6 sessions (including + 3.8% this 03/06).
Market optimism (what a ‘market’ … there is only one buyer left: the central bank on Italian debt and poorly rated corporate debts) is again put on the account of indicators which would testify to a timid beginning of recovery ….
But in fact, it has been more than a week since the ‘market’ paid for the probable announcement of an extension of the ECB’s purchasing program of + 500bnE tomorrow.
No right to disappoint him … but insiders should know that this risk does not exist: it is a windfall that will spill almost instantly into the financial sphere, and stock market assets.
Much later in the real sphere, the modalities are indeed not yet defined, part of the European support plan will not be released until early 2021, while purchases of ECB assets have already started, notably with the 100% collection of Italian debt for 6 weeks.
But there was also an ‘alignment of planets’ this Wednesday with US figures, some of which appear to be a ‘miracle’ like that published by ADP and according to which the American private sector destroyed only 2,760,000 jobs last month then that the average consensus of economists – supported by recent figures from the Labor Department – was around -9 to -9,500,000.
The ‘market’ would therefore have been mistaken for 6.5 to 7 million employees?
This publication therefore shows a clear improvement over the 19,557,000 job losses recorded in April, a figure revised downwards compared to an initial estimate which was of a loss of 20,236,000 jobs.
Other bullish spurts since 4 p.m., the ISM (Institute for Supply Management) index has rebounded to 45.4 for the past month, against 41.8 in April, it is a little better than the consensus of 44.
The Commerce Department, however, reports a 13% drop in orders to industry in the United States in April.
But this is a slightly less marked drop than expected by analysts, who bet on a decline of -14%.
Durable goods orders fell -17.7% in April.
Enough to euphorize Wall Street: at mid-session, the Dow Jones jumped + 1.6% to 26.2160, the S & P500 e + 1.1% to 3.115 and -it’s historic, the Nasdaq-100, at 9.706 returned at 0.1% of its absolute closing record of February 19 registered at 9.718, it now displays + 11% since January 1.
But given the dividends already distributed, the Nasdaq was already yesterday since above its absolute records of February.
In terms of European statistics, at 32.1 in May, the composite index of global activity of IHS Markit highlighted a further marked drop in activity in the French private sector: if the index has recovered from April (11.1), the rate of contraction remains among the highest. Many companies remained closed while those which resumed their activity found themselves confronted with an environment which was very unfavorable to demand. The services sector recorded the largest decline.
Rising from its flash estimate (30.5), and up sharply from April, the PMI composite IHS Markit index of overall activity in the Eurozone was 31.9 in May. Despite everything, he continues to report a severe contraction in activity.
In addition, to 30.5 in May (compared to 28.7 in 1st estimate), the PMI IHS Markit index for service activity in the euro zone recovered sharply compared to the historic low recorded in April (12 , 0). It reaches a peak of three months in passing.
The UK PMI composite index climbed from 13.8 in April (by far its lowest level since the start of the survey in 1998) to 30 in final data for May, according to IHS Markit who announced it at 28 , 9 in flash estimation.
In addition, after three months of contraction, activity in the Chinese services sector returned to growth in May, according to the results of the latest Caixin survey of purchasing managers.
In today’s news, with a cautious approach during the Covid-19 pandemic, the insurance company AXA (+ 10.3%) indicates that its board of directors has decided to reduce its dividend distribution proposal from 1.43 to 0.73 euros per share … with the option of adding 0.7E at the end of the year.
Renault (+ 10.5%) announces the establishment with a pool of banks of a credit opening agreement for a maximum total amount of five billion euros benefiting from a guarantee from the French State, to finance its liquidity needs.
Unibail (+ 14%) aligns a 3rd consecutive session with more than 10% gain and accumulates + 55% in 8 days.
Airbus is also continuing to take off with + 7.4% and is ahead of one of its Thales suppliers with + 6%.
The board of directors of the luxury giant LVMH would have had a meeting in Paris to discuss the proposed agreement on Tiffany in a context of deterioration of the American market, says WWD.
The meeting would have focused on the relevance of the acquisition of the American jeweler in a context of deteriorating prospects for the American market following the covid-19 pandemic and the riots. LVMH’s offer for Tiffany & Co. suddenly seems much less certain, said WWD (Women’s wear daily).