(News Bulletin 247) – The Parisian index ended sharply higher on Tuesday, benefiting from the fall in bond yields itself linked to comments from members of the Federal Reserve.

It has been a long time since the Paris Stock Exchange had experienced such an increase (on July 27 with +2.05%). The CAC 40 ended Tuesday up 2.01% to 7,162.43 points, benefiting from a renewed appetite for risk linked to the easing of bond rates.

The 10-year yield on the American bond fell to 4.652%, compared to 4.804% on Friday evening (it was not listed on Monday due to Columbus Day). After having plunged the day before, that on the German 10-year rose to 2.803%.

This relaxation should be put into perspective with the declarations of two members of the American Federal Reserve (Fed). Lorie Logan, president of the Dallas Fed, known for her restrictive stances, said the recent rise in bond yields meant the Fed had less need to raise its key rates. She also noted that financial conditions had tightened significantly in recent months.

>> Access our exclusive graphic analyses, and gain insight into the Trading Portfolio

Towards a recovery plan in China?

Fed Vice Chairman Michael Barr echoed those statements, saying that “significant progress” had been made “to get inflation in the direction we want,” and that it is ” not too focused on a future number.”

Following these comments, 88% of investors expect the Fed to maintain rates at its next meeting on November 1, according to the CME Group’s FedWatch tool.

“It seems that the recent rise in bond yields has not gone unnoticed by the central bank, to the point that Fed officials are being less restrictive,” underlines Craig Erlam of Oanda.

Bloomberg press information on China was also able to support the market. The news agency said the Chinese government plans to increase its debt issuance by $137 billion to finance infrastructure spending to boost growth.

“Bad students” on the honor roll”

In terms of values, only Carrefour (-1.2%) fell on the CAC 40.

This renewed appetite for risk has also led to “scrap” stocks which suffered during previous sessions. Alstom took 4.5%, Casino 9.8%, Eutelsat 7.8%. Maisons du Monde, despite a profit warning, gained 0.9%.

Europapi was not so lucky. The former Sanofi subsidiary plunged 59%, after lowering its outlook for 2023 and suspending those for the medium term.

Ubisoft dropped 5%, penalized by the postponement of a game and the disappointing start of the new Assassin’s Creed in the United Kingdom.

Fnac Darty gained 7.4% driven by a legal victory which will result in a payment of around 130 million euros.

Elis gained 4.8% supported both by the announcement of the entry of a new Brazilian shareholder and a positive note from Deutsche Bank.

On the foreign exchange market, the euro gained 0.25% against the dollar at 1.0595 dollars. As for oil prices, they mark a slight pause after their jump of 4% on Monday. The December contract on Brent from the North Sea lost 0.9% to 87.33 dollars per barrel, while that of November on WTI listed in New York also lost 0.9% to 85.60 dollars per barrel.

After the close, LVMH revealed quarterly results that were worse than expected. This could weigh downward on the first capitalization of the CAC 40 on Wednesday morning when trading resumes.