(CercleFinance.com) – The Paris Stock Exchange should retreat again on Monday morning after its sharp decline last week, following a sudden surge in long rates.
Around 8:15 a.m., the ‘futures’ contract on the CAC 40 index – August delivery – fell 21.5 points to 7307 points, suggesting a start to the week in the red.
The Parisian market had fallen by more than 2.2% over the whole of the past week and dented in passing all its main supports fixed at 7475, 7450 and 7420 points.
Global markets, already worried about uncertainties surrounding global growth, were chilled by Fitch’s downgrade of US debt, which reignited tensions in the bond market.
In the United States, the week certainly ended with a limited decline of around 1% for the Dow Jones index, but the S&P 500 and the Nasdaq suffered much more pronounced weekly losses, of more than 2 %.
‘Given the good performance of equities over the past two months, which had enabled the S&P to post a rise of 20% this year, the downgrading of Fitch’s rating served as an excuse for short-term investors to take some profits and take a much-needed break,” said Angelo Kourkafas, strategist at Edward Jones.
This sudden resurgence of nervousness on the side of US long rates resulted in a rise in yields, making equities mechanically less attractive, especially on the technology side.
“The equity markets are correcting and volatility is rising,” notes Jeanne Asseraf-Bitton, head of research and strategy at BFT IM.
‘Euro securities, affected by mixed corporate results, are underperforming,’ she adds.
All of these factors could again urge investors to be cautious as markets enter a summer holiday period that is characterized by reduced volumes and thinner news on the corporate side.
The week that is opening promises to be quite poor in macroeconomic indicators, apart from several data on inflation expected in Germany and especially in the United States.
The next test is set for Thursday with the release of monthly US consumer price data, which may prove resilient given the recent upswing in energy prices.
With a sharp drop in the pace of results publications, company announcements will become rarer, even if the accounts of Bayer, Disney, Novo Nordisk or Siemens are expected in the coming days.
Although it begins to ease slightly, the yield on ten-year US Treasury bonds, which is still closely watched, still remains above the symbolic 4% mark.
On the European market, the ten-year German bond is trading at a still very high level of 2.56%.
Like the week that opens today, the day should remain calm in the absence of major economic events, with the exception of industrial production figures in Germany.
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