The week ended strongly on the Paris stock exchange: the CAC set a new annual record at 7,036 (+0.9%) and is holding above 7,025 (+0.75%): the weekly balance is positive by more than +2.5%, and the gain has reached +8.6% since January 1, the best 1st fortnight in 44 years for the CAC, and the best ever for all European indices.
The CAC40 'GR', at 20,670, is now just 1.5% off its all-time high of January 5, 2022: the 'dividends included' index has seen its advance slowed by the sharp downturn in the automotive sector, with -4.1% for Stellantis, -2.5% for Renault, and -0.8% for Michelin.
The Euro-Stoxx50 picked up +0.5%, while Wall Street quickly erased its initial decline of -0.5% (on average): +0.2 on the Dow Jones, -0.1% on the S&P500 and the Nasdaq.
US indices rebounded with the publication of the University of Michigan's consumer confidence index: it came out at 64.6 in January, against a previous estimate and a consensus of 60.5 (it was 59.7 in December).
The chapter on US inflation figures closed at 2:30 p.m. with US import prices: they rose by 0.4% last month, following a 0.7% fall in November, while export prices fell by 2.6% in December, after a 0.4% decline the previous month.
According to the Labor Department, over the last 12 months, US import prices rose by 3.5% (+1.9% excluding petroleum products), while export prices rose by 5% (+4.4% excluding agricultural products) in December 2022.

In Germany, according to initial Destatis calculations, German price-adjusted GDP for 2022 rose by 0.1% in Q4 and by 1.9% compared with 2021 (thanks to the 'acquis de croissance' at the start of the year).
After adjusting for calendar effects, economic growth was even 2%.

In 2022, Germany's overall economic situation was affected by the consequences of the war in Ukraine and extremely high energy price rises," explains Ruth Brand, President of the Federal Statistical Office.

"There were also severe material shortages and delivery bottlenecks, massive price rises, e.g. for food, skilled labor shortages and the continuing but declining Covid-19 pandemic," she continues.

The stagnation of German GDP in the fourth quarter shows that high inflation has not spared the German economy', reacts Commerzbank, for whom 'a mild recession with a 0.5% drop in real GDP remains likely' in 2023.

In Europe, industrial production rebounded by 1% in the eurozone in November, a much stronger rise than expected, show figures published Friday by Eurostat.
By way of comparison, economists on average were forecasting a limited rise of 0.5%, following a 1.9% decline in October.

In detail, production of capital goods rose by 1%, intermediate goods by 0.8% and consumer durables by 0.4%, while energy production fell by 0.9%.

At state level, the highest monthly rises were recorded in countries with little or no industry, such as Ireland (+6.4%), Luxembourg (+5%) and Malta (+4.6%); the biggest falls were in Estonia (-3.7%) and Croatia (-1.9%).
Compared to November 2021, industrial activity in the region rose by 2%.

Starting this Friday, investor interest will now turn to the corporate earnings season, which kicks off today with US banking groups.

Financial services giants Bank of America, Citi, JPMorgan Chase and Wells Fargo are all scheduled to unveil their fourth-quarter accounts at midday.
Citigroup reported a -21% decline in fourth-quarter earnings, to $2.51 billion, due to higher provisions for bad debts.
The giant BlackRock reported Q4 profits down -23% (to $1.26 billion) and sales down 15% to $4.34 billion, but came in slightly ahead of expectations (always the famous 'better than expected').
According to FactSet data, S&P 500 corporate earnings are expected to decline by just over 4% in the last three months of 2022.

Forecasts were more optimistic last September, with growth expected to reach 3.5%.
On the interest rate front, bond markets are digesting the previous day's rise, with OATs improving by the margin to 2.612% from 2.622%, Bunds up 2.2pts to 2.145% and US T-Bonds down 1pt to 3.454%.

The next few sessions are likely to prove volatile, as it is not unusual for markets to hesitate until they can make up their minds not only on the quality of earnings, but also on their prospects.

In company news, OVHcloud reports a very good start to the year, with sales of 216 million euros for the first quarter of its 2023 financial year, up 15.4% on the same period last year.

TotalEnergies announces the start-up of the Deutsche Ostsee LNG import terminal, located in Lubmin on the German Baltic Sea coast, enabling the French company to become one of Germany's leading LNG suppliers.

Air France-KLM jumps nearly 7% to top the SBF120, buoyed by a recommendation upgrade from 'neutral' to 'buy' by UBS, with a price target raised from 1.75 to two euros for the Franco-Dutch airline.


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