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Tuesday, February 11, 2025

CAC40 Reaches Daily Peak, Boosted by Luxury Sector Gains

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Paris Stock Exchange surged 2.14% to 7,634 points, propelled by luxury brands like LVMH, Kering, and Hermès. In the US, retail sales rose 0.4%, below expectations, while unemployment claims increased. Manufacturing showed strength with a significant rise in the Philly Fed index. Inflation indicators revealed stable import prices, though energy costs spiked. In Europe, Germany’s inflation was confirmed at 2.8%. Crude oil prices climbed, and corporate news included Alstom’s train modernization deal and TotalEnergies’ refining margin recovery.

Paris Stock Exchange Hits New Heights

The Paris Stock Exchange concluded the session on a high note, enjoying a notable increase of 2.14%, reaching 7,634 points. This impressive performance was largely driven by a surge in the luxury sector, with LVMH leading the pack with a 9.1% rise, followed by Kering at 6.2%, and Hermès at 4.9%.

This bullish trend was further fueled by Richemont’s exceptional results, revealing a record nine-month revenue of €16.2 billion, marking a 3% increase (4% at constant exchange rates), which has sparked renewed optimism for a recovery in the luxury market.

US Economic Indicators and Market Reactions

Meanwhile, across the Atlantic, US indices displayed minimal movement, with the S&P 500 and Dow Jones remaining flat, while the Nasdaq experienced a slight dip of 0.2%. On the economic front, the US retail sales figures for December showed a modest increase of 0.4%, falling short of the previous month’s growth of 0.8%.

When excluding the automotive sector, which can often be unpredictable, retail sales also rose by 0.4%, slightly below Bank of America’s expectation of a 0.6% rise. Additionally, the Department of Labor reported 217,000 new unemployment claims for the week ending January 6, reflecting a 14,000 increase from the prior week.

In a positive turn, the manufacturing sector is experiencing a robust rebound, highlighted by a historic rise in the Philly Fed index, which jumped from a revised -10.9 in December to +44.3 in January—the highest figure since April 2021. Key components such as the new orders index and current shipments index also saw significant increases, reaching levels not seen since late 2021.

On the inflation front, import prices recorded a slight uptick of 0.1% in December, maintaining this increase for three consecutive months, indicating that inflationary pressures may be stabilizing in the US. However, energy prices surged by 1.4% last month, attributed to escalating oil and natural gas costs, marking the most substantial rise since April.

Food and beverage prices also experienced an acceleration in December, climbing 2.8% from the previous month’s 1.4%. Over the past year, import prices have risen by 2.2%, the most considerable increase since December 2022.

In Europe, Germany’s inflation rate, measured by the harmonized index of consumer prices (HICP), was confirmed at 2.8% year-on-year for December, as reported by Destatis. The European Central Bank’s recent meeting minutes indicated a fourth rate cut in six months, with President Christine Lagarde expressing concerns regarding potential risks to eurozone growth.

Despite the encouraging US inflation data, investors are likely to adopt a cautious stance ahead of Donald Trump’s inauguration scheduled for Monday. Analysts at Cogefi, a Paris-based portfolio management firm, suggest that the 2025 stock market year may truly commence on January 20.

In the commodities market, crude oil prices saw a significant rise, with light American crude trading above $80 for the first time since last summer. Brent crude experienced a 2.4% decline, hovering around $80.5 after briefly testing $82.5. Gold prices also surged, surpassing $2,700 per ounce, reflecting a 2% increase in just 24 hours.

Lastly, the euro remained stable against the US dollar at $1.03, marking a slight 0.1% gain. In corporate news, Alstom announced a new agreement with Metrolinx for the modernization of 181 two-level suburban train cars for Canada’s GO Transit service. TotalEnergies reported a rebound in its European refining margin to $25.9 per ton in Q4 2024, compared to $15.4 in Q3, while Stellantis faced a 9% drop in vehicle deliveries in Q4, primarily due to challenges in the North American market.

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