FRA40 Rallies on ECB Rate Cut Hopes & Strong LVMH Results

  • FRA40
    (${instrument.percentChange}%)
  • MC.fr
    (${instrument.percentChange}%)

FRA40 Analysis

The European Central Bank stood pat on rates for third straight meeting on Wednesday, repeating that they need to stay at current levels for a "sufficiently long duration" to restore price stability. Having already tightened by 400 basis points, with the economy in a bad shape and with progress on inflation recently, officials have hinted at peak rates. President Lagarde said it is "premature" for the Governing Council to discuss rate cuts, but stood by her recent comments that hinted to summer as a likely starting point. [1]

This was enough to renew market optimism for a faster and more aggressive pivot, sending the FRA40 higher. It index is also helped by the strong 2023 results of French luxury giant LVMH Moët Hennessy Louis Vuitton (MC.fr), whose stock gains around 10% today. The firm reported nearly 10% y/y rise in sales, with the CEO speaking of "significant growth". [2]

FRA40 rallies since yesterday, as markets reacted positively to the outcome of the aforementioned events and tries to set new record highs (7,665). On the other hand, LVMH revenues growth slowed from the 23% rise of 2022, while the ECB has not committed to rate cuts and markets appear overly optimistic. The move looks stretched and there is scope for a pullback towards the EMA200 (at around 7,390), although sustained weakness below 7,280 has a higher degree of difficulty.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 26 Jan 2024 https://www.ecb.europa.eu/press/pressconf/2024/html/ecb.is240125~db0f145c32.en.html

2

Retrieved 15 Jul 2024 https://www.lvmh.com/news-documents/press-releases/2023-new-record-year-for-lvmh/

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