CAC 40: With the end of the US debt freeze approaching, the CAC 40 is regaining some momentum

(BFM Bourse) – The Paris index rose mid-session as the US House of Representatives approved the bipartisan deal to raise the debt ceiling. The ball is now in the Senate’s court.

After the purge of the last sessions – the CAC 40 has lost more than 200 points in three days – the Paris stock market is starting a small recovery. The CAC 40 thus gained 0.7% on Monday mid-session at 7151.35 points and thus went back above 7100 points.

The small recovery in risk appetite is driven by the milestone reached with the agreement between Republicans and Democrats to raise the US debt ceiling. This text was approved by a very clear majority (314 votes for, 117 against) overnight from Wednesday to Thursday in the House of Representatives. The US Senate must now vote on this agreement in order for it to enter into force and avoid default by the US.

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Against major US debt issues

Still, in the event of a positive vote, the market may ask itself certain questions. A deal means the US Treasury will have to line its pockets and issue hundreds of billions of dollars in debt. According to JPMorgan estimates cited by Reuters, this could represent $1.1 trillion over seven-month “T-bills,” short-term bonds. This could potentially weaken market liquidity.

“Bond markets estimate that the Treasury will need to issue around 750 billion of additional bonds over the next few months to raise funds,” said Stephen Innes of SPI Asset Management. “The big question is whether it will result in a significant tightening [du marché, NDLR] which will cause the dollar to rise sharply and stock markets to fall,” he added.

The market will pay close attention this afternoon to data from the ADP cabinet for May on US private sector employment, a more or less good approximation of the official data due on Friday.

These statistics are likely to move the market, judge Naeem Aslam of Zaye Capital. “It is important to keep in mind that the US labor market remains robust and many labor market-related indicators are still as robust as they were before the Covid crisis, meaning that the Fed [la Réserve fédérale, NDLR] should worry less about recession and focus more on inflation,” he said.

Casino still lower

As for values, Casino continues its never-ending descent into stock market hell, down 8.7% and losing more than 20% over all of the last five sessions, including this Thursday.

Rémy Cointreau fell 0.1% after announcing results for the 2022-2023 financial year without surprises and confirming its outlook for the current financial year.

Elsewhere, the euro rose 0.07% against the dollar to $1.0696. Oil prices fall slightly. The August Brent North Sea contract is up 0.3% at $72.39, while the July WTI contract listed in New York lost 0.4% at $67.80 a barrel. barrel.

Julien Marion – ©2023 BFM Bourse

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