(CercleFinance.com) – The Paris Stock Exchange is expected to open slightly lower on Monday morning, as initiatives are expected to be limited on the market two days before the US Federal Reserve’s monetary policy announcements.
Around 8:15 a.m., the future contract on the CAC 40 index – which has kept tilted on the October deadline – yields 24 points to 6049.5 points, signaling a continuation of the marked fall (-2%) of the Last week.
The Fed will once again find itself in the spotlight this week by holding, starting tomorrow, its two-day strategic committee, the conclusions of which are eagerly awaited by investors.
It seems understood for all analysts that a new turn of the screw is preparing, the question being simply whether it will be an increase of 75 or 100 basis points.
According to CME Group’s ‘FedWatch’ barometer, traders now estimate an 82% chance of a 75 basis point hike in policy rates after the meeting.
But the probability of a rate hike of 100 points holds more and more the rope with economists, who now estimate it at 18% whereas it was estimated at zero a week ago.
Jerome Powell’s statements at the end of the meeting may also strongly agitate the markets, especially if investors were to reveal the slightest sign invalidating their calendar.
The markets took a severe hit last week after the announcement of US inflation which fell only modestly to 8.3% in August, which leaves the Federal Reserve in the same state of alert.
The FOMC will probably prefer to limit itself to indicating that further substantial increases remain on the agenda for the following meetings in November and December.
Small reason for hope, expectations relating to the US seem to have ebbed in recent weeks, as illustrated by the latest available statistics.
The American consumer confidence index from the University of Michigan, published last Friday, showed that household inflation expectations over a one-year horizon had fallen to 4.6%, their highest low level in one year, thanks to the recent decline in energy prices
Despite a Chinese economy that still appears to be in difficulty and the persisting energy crisis in Europe, which pose growing risks to activity, the Fed could however succeed in orchestrating a soft landing, strategists believe.
According to this dream scenario, the Fed would manage to continue its ongoing monetary tightening, without, however, causing a more marked slowdown in growth than that observed in recent months.
This context would be ideal to allow the equity markets to regain some momentum on healthier fundamentals, at a time when the S&P 500 index has fallen by nearly 10% over the past month.
From a statistical point of view, it will be advisable to monitor, in the coming days, the latest indicators on the American real estate sector, which should show that the market correction is continuing.
In Europe, the preliminary estimates from the PMI surveys, which will be unveiled on Friday, will give a first indication of the climate for
business in September and on the seriousness of a recessionary threat on the Old Continent, knowing that the services sector had shown serious signs of weakness in August.
No leading indicator is on the agenda today.
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