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(CercleFinance.com) – The Paris Stock Exchange should start on an irregular note Monday morning, with investors being cautious while awaiting the meeting of the European Central Bank (ECB) scheduled for Thursday.
Around 8:15 a.m., the ‘future’ contract on the CAC 40 index – delivery at the end of October – fell by barely two points to 7579.5 points, a harbinger of an opening without much change.
After a difficult summer, global stock markets have returned to an upward path over the past two months, driven by the prospect of seeing the Fed like the ECB take decisions likely to support economic activity.
Since August 6, the CAC 40 has gained more than 6%, a favorable trend which should persist ahead of the ECB’s monetary policy decisions which will be announced on Thursday.
Many observers believe that the poor European figures published recently – PMI in the lead – should encourage the Frankfurt-based institution to accelerate its rate cuts.
With the disinflation process continuing, expectations of ECB rate cuts now raise the prospect of a new rate reduction of 25 basis points this week, followed by another in December.
‘Fiscal policies are taking a restrictive turn,’ recalls Bruno Cavalier, chief economist at Oddo BHF.
‘In these conditions, why maintain a restrictive monetary policy?’, asks the analyst.
The results season, which kicked off last Friday by the major American banks, should also punctuate the next sessions.
On the week’s agenda are, among others, publications from the Dutch semiconductor industry equipment giant and the video-on-demand platform Netflix.
In addition to central banks and results, US retail sales figures, due Wednesday, are also likely to move the markets.
Investors’ eyes will also turn to Beijing, from where Chinese gross domestic product (GDP) figures will be published on Thursday which will give valuable clues about the state of the economy of the world’s second largest economy, which is currently the subject of a major recovery plan.
On the bond market, the recent easing movement is confirmed since the yield on ten-year US government bonds – which had reached new highs since the end of July last week at 4.11% – fell back towards 4.07% this Morning.
The safe haven values of Bunds remain in demand a few days before the monetary policy meeting of the European Central Bank (ECB), with the ten-year German reference rate falling to 2.26%.
On the foreign exchange market, the euro is practically unchanged against the dollar, remaining around the threshold of 1.0930, against a backdrop of questions about the next rate cuts by the Fed and uncertainty around the election presidential election next month.
The price of a barrel of oil is also evolving without much change, with caution remaining in order while awaiting a possible counterattack from Israel after the recent Hezbollah strikes.
Market participants nevertheless seem to continue to favor the idea that the response will not target Iranian nuclear infrastructures, which leads the barrel of Brent to fall by 1.2% to 78.1 dollars.
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