CAC 40: Why Rising US Unemployment Is Driving a CAC 40 Uptick

Cac 40 : Le départ de Nancy Pelosi de Taïwan a donné des ailes à la Bourse de Paris

(BFM Bourse) – The announcement of a slowdown in job creation and a rise in unemployment last month in the United States paradoxically fueled the Paris index. The CAC 40 closes the session for the day with a strong rise of more than 2.2% to 6,100 points. However, on a weekly basis, the Parisian index yields 1.7%

The latest US employment report has been well received by the markets. Slightly higher at midday, the Paris Stock Exchange accelerated its rebound after the publication of the US employment figures for August in the early afternoon. They reveal a slowdown in the creation of new jobs on the other side of the Atlantic, as well as a contained increase in the average hourly wage.

The CAC 40 closed a stone’s throw from its daily high (6,177.07 points), up 2.21% to 6,167.51 points on Friday. However, the burst of pride seen this weekend will be insufficient to end the week in green, as the Parisian side lost 5% in the last four sessions. On a weekly basis, it returned another 1.7%, bringing its cumulative losses to 13.7% since the start of the year.

Following Wednesday’s ADP company report, Thursday’s weekly jobless claims, the official report acts as a “justice of the peace” as to the state of health of the labor market in recent weeks across the Atlantic. Official statistics show a slowdown in job creation as the US economy (excluding agriculture) created 318,000 jobs in August, according to the Labor Department report. This is well above the 298,000 creations expected by consensus, but significantly below July’s level of 526,000 jobs. The unemployment rate, for its part, points to an increase for the first time since January, 0.2 points to 3.7%. In July it was at 3.5%, the lowest since February 2019. As for wages, its increase is contained at 5.2% where analysts expected an increase of 5.3%.

Bad economic news… hailed in the stock market. Because the report of the day feeds the hopes of the operators on a moderation of the rise in rates by the US Central Bank (Fed) during its next meeting, on September 21 and 22. The probability of a 0.5 percentage point rate hike thus rises to 36%, up from just 25% the day before, with most traders still anticipating a 0.75 percentage point hike in the coming weeks. .

On Wall Street, the reaction was also positive with both the S&P 500 and the Dow Jones up 1% by the time of the European close. The Nasdaq Composite followed the trend with a 1.1% gain ahead of the Labor Day long weekend. In fact, Wall Street will be closed on Monday for Labor Day, which marks the real end of the holiday across the Atlantic.

In Europe, investors learned earlier this morning of an acceleration in producer prices in the euro zone for the month of July. They rose 4.0% in a month and 37.9% in a year in July. In this context, the European Central Bank is also expected to pivot in its response to control high inflation.

Oil prices rebounded on Friday after a difficult week ahead of the OPEC+ oil exporters meeting. A barrel of North Sea Brent for October delivery rose 2.2% to $94.21, while WTI for September delivery rose 2.5% to $88.48.

Buyer flows in Saint Gobain after disposals

On the value front, Saint Gobain ended up 3.7% after announcing the sale of its “Crystals and detectors” business and that of glass processing sites in northwest France. The French building materials champion has been increasing sales for several months as part of its strategic plan called “Grow & Impact”.

Oil stocks recover after the rise in the price of crude oil: TotalEnergies revalues ​​2.2% while Technip Energies advances 1% for its part.

Atos gained 6.6%, Lisi 5.8% and Elior rounded out the Paris SRD winners with a 5.2% gain.

On the smaller-cap side, Abivax soared more than 11% as biotech reassured the market by securing crucial financing.

Europlasma closed the week with a rise of more than 12%. Its subsidiary Intertam announces that it has closed a framework agreement with the Algerian company SO.GE.B.ZRITA, specialized in asbestos removal.

Showroomprivé gained 3.2%, the manager and co-founder of the e-commerce site David Dayan increases his stake to 37.17% of the company’s shares and now owns 47.81% of the voting rights.

In the foreign exchange market, the dollar fell against the euro after the publication of unemployment figures in the United States in August, trading the euro at 1.0024 dollars (+0.7%). The dollar made the most of its safe-haven status, hitting records against many currencies, including the yen, which plunged against the dollar to its lowest level in 24 years.

Sabrina Sadgui – ©2022 BFM Bourse

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