After rising for 11 days in the first 13 sessions of the year, the Paris Bourse corrected rather sharply on Thursday, losing 1.86% to 6,951 points, as doubts resurfaced as to the speed of monetary policy easing by central banks.

The ECB (via Christine Lagarde) and the FED (via several of its members), meeting in Davos, sent the markets a message of firmness and determination in their fight against inflation. A warning that was heeded, a week ahead of the Fed meeting.

Against this backdrop, Wall Street is also trading in the red on Thursday, also affected by profit-taking after its strong rise in the first two weeks of the year, with -1% on the Nasdaq and -0.8% for the S&P500.

Some strategists believe that the markets have moved too fast at the start of the year, while the latest indicators have reinforced the preferred scenario of a soft landing for the economy.

The markets are obviously trying to anticipate a recovery before the slowdown has happened", points out Marcus Poppe, Global Equity Portfolio Manager at DWS.

In particular, the professional believes that the valuation of US equities remains too high, but that the future looks a little brighter in Europe, leading him to overweight European equities.

On Thursday, investors took note of a new series of economic statistics, including the latest figures for the US housing sector.

The Commerce Department reported a 1.4% decline in US housing starts last month, to an annualized rate of 1,382,000, a level slightly higher than economists' expectations.

U.S. building permits - which are supposed to be a precursor of future housing starts - also slumped, by 1.6% to 1,330,000 annualized in December, thus slightly missing the market consensus.

With access to financing tending to dry up, indicators for the residential construction sector, which have been turning red for many months, are likely to remain on a downward trend.

Another figure of primary interest to the FED: the labor market remains extraordinarily robust, with weekly jobless claims in the USA falling by 15,000 in the week to January 9, to 190,000 from 205,000 the previous week, according to the Labor Department.

The four-week moving average - considered a better indicator of the underlying trend in the labor market - shows a week-on-week decline of 6,500 to 206,000.000.

Last but not least, the Philly Fed index, in complete contrast to the dismal Empire State index published the previous day, showed an upturn in manufacturing activity in the northeastern US: the index climbed to -8.9 after falling to -13.7 in December, whereas economists were forecasting a more limited recovery to around -11.
This is the seventh time it has fallen below zero in the last eight months.

The employment sub-index improved significantly, rising from -0.9 to +10.9 month-on-month, as did the new orders sub-index, which improved but remained in negative territory at -10.9.

Bond markets are taking advantage of all the above to consolidate: our OATs are up +8pts to 2.516%, Bunds +7.5pts to 2.08%, Italian BTPs +2pts to 3.826%.

US T-Bonds are doing rather well, with +3pts to 3.407%.
Little movement on Forex, with the euro stable against the greenback at around $1.08.

In French company news, Dassault Systèmes announced on Thursday that it would be joining forces with IBM to accelerate the sustainable transformation of industry players through the adoption of "virtual twins".

Arkema announced that it had signed a long-term agreement with Engie, starting January 1, 2023, for the supply of 300 GWh/year of renewable biomethane in France, one of the largest private biomethane contracts in Europe to date.

Nexans announced on Thursday that it would be stepping up its efforts to combat counterfeiting of its cables by teaming up with Austria's Authentic Vision. Under the terms of the partnership, the French group will adopt the patented 'Meta-Anchor' holographic labels.

Edenred announces that it has acquired a stake in Betterway, a French fintech founded in 2019 and a pioneer in the provision of corporate mobility passes, of which the group is already a commercial partner since September 2022.

Lastly, the European Commission announced that it had approved the creation of two joint ventures by Altarea and Carrefour, namely the opening of two shopping centers in Sartrouville and Nantes respectively.

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