CAC40: benefits from a sharp rebound ahead of the US jobs report

The Paris Bourse opens the session strongly higher, a few hours before the publication of monthly employment figures in the United States. The CAC40 index is up 1.1% at 7,412 points, following the rebound of the last five sessions.

Despite the adoption of the motion of censure that brought down the Barnier government on Wednesday evening, the Paris market ended yesterday’s trading session with a gain of 0.4% at 7,330 points.

With a rise of 2.4%, the CAC is paradoxically poised to end a series of six consecutive weeks of decline, while the government’s overthrow has had the effect of opening up a new period of political uncertainty in France.

Many analysts point out that the Paris index has weathered the turbulence rather well so far.

The fall of France’s minority government and the rejection of its ambitious austerity budget do not necessarily mean an immediate and major financial crisis”, they add.

“We do not expect the French disorder to trigger a crisis of confidence in the euro similar to that of 2010-2012”

The France-Germany spread has stabilized at 0.78 basis points, showing that investors are not alarmed for the time being.

In his address broadcast last night, President Macron pledged to appoint a new prime minister ‘within the next few days’, while ruling out resigning by the end of his term.

Following the French uproar, investors will refocus on the economic indicators due later today.

The monthly report from the US Department of Labor is due at 2.30pm, and economists are expecting a rebound in job creation to 200,000 in November, after the 12,000 created in October as a result of the hurricanes that hit the US.

Overly vigorous figures could in fact be unwelcome by investors, reinforcing the possibility that the Fed will curb its support measures for the economy.

Traders now place the probability of a rate cut this month at over 70%, compared with 66% a week ago, according to the FedWatch barometer of stock market operator CME Group.

Investors will also be keeping an eye on the afternoon release of the preliminary version of the University of Michigan’s consumer index, which will measure the effect of Trump’s election on US household morale.

On the currency markets, the euro is completely unaffected by the Barnier government’s censure, and is even strengthening against the dollar, returning to the 1.0575 zone.

Oil prices, for their part, remain supported by signs of a lasting reduction in OPEC supply, even if Brent crude is consolidating slightly by 0.2% below $72 this morning, while US light crude (West Texas Intermediate, WTI) is down 0.1% at $68.2.

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