(News Bulletin 247) – The Paris Stock Exchange appreciates the good news. In low volumes, the CAC 40 recovered 7,400 points on Thursday evening at the close, in reaction to better-than-expected employment and consumption figures.

The scenario of a recession in the United States is gradually moving away as statistics attest to the good performance of the world’s leading economy.

The CAC 40 ended sharply up 1.23% to close at 7,423.37 points after a daily high of 7,437.34 points (+1.41%). The rebound is on a par with investors’ relief after the publication of solid US consumption figures for July, and encouraging employment data.

This progression, however, took place in low volumes with only 2.37 billion euros exchanged, on this Assumption Day which is a public holiday but not a non-working day on the Paris Stock Exchange. Good humor has therefore taken over the financial markets after a stronger than expected increase in retail sales in the United States last month. The American consumer barometer rose by 1% over one month in July, exploding the consensus which was counting on a much more modest increase of +0.2%. In June, retail sales had fallen by 0.2%.

On the American employment side, which had been a major concern in recent weeks, the lights are also green. Applications for unemployment benefits fell more than expected, to 227,000 the previous week, which is well below the 235,000 applications expected by the consensus cited by Dow Jones.

“Last week’s growth fears seem less frightening today,” Patrick O’hare of Briefing.com was quoted by AFP. “This data is like a sudden light in a dark room when you discover there’s no monster under the bed,” the analyst said.

These data should lead the American Federal Reserve to proceed with a first monetary easing as early as September. Moreover, a Fed official has spoken in favor of such a scenario. “It would now appear that the balance of risks between inflation and unemployment has shifted. The time is approaching when a more moderately restrictive monetary policy could be appropriate,” declared Thursday the president of the Fed of St. Louis, Alberto Musalem.

Markets are now pricing in a 0.25 percentage point cut, with recent data from the US not supporting a larger move. According to CME FedWatch, the probability of the Fed cutting rates by a quarter of a percentage point has actually risen a notch to 74.5% from 62.5% after the release of this battery of better-than-expected statistics.

“The strong retail sales and jobless claims data suggest that a 25 basis point (0.25 percentage point) cut in September looks more likely than a 50 basis point cut at present,” ING’s James Knightley was quoted by Reuters.

On the bond market, yields on ten-year US debt are rising sharply, to 3.938% after peaking at 3.95% against 3.83% on Wednesday evening. And on the foreign exchange market, the greenback is firming up to $1.0966 per euro, while it was trading at $1.10 at midday.

OVH on the rise

On the business side in France, the news is sparse. Among the notable increases of this quiet day, we can cite OVH Cloud which jumped by 10.2% while Emeis (the former Orpea), Nexity and Maisons du Monde gained between 4.4% and 4.6%.

Worldline rose 2.8%, following half-year results that exceeded expectations for its Dutch peer Adyen, which gained 7.5% on the Amsterdam Stock Exchange.

Oil prices remain well oriented. The price of a barrel of North Sea Brent, for delivery in October, rose by 1.9% to $81.24, while that of WTI for delivery in the same month rose by 1.8% to $78.39.