(CercleFinance.com) – The Paris Stock Exchange (-0.35% to 8,150) will not post a 9th week of increases in a row, with the CAC40 crumbling by -0.2% weekly.
On a technical level, the CAC 40 stumbled again yesterday on the 8,250 point zone, considered a key level, but also as a target for profit taking for certain traders.
What stands out once again is the paucity of volumes (less than €1.5 billion in 8 hours of trading) which should be closer to €2.5 billion than €3 billion by the close.
The CAC40 is penalized by a further decline in the luxury sector with Kering and LVMH at the back of the pack with -3.1% and -2.4% respectively… which also affects the E-Stoxx50 (-0.4 %), but not enough to prevent it from registering a 9th consecutive week of increase, for the 2nd time in the 21st century (after October/November 2022)
A closing of the E-Stoxx above 5,030 Points is almost assured and the weekly score remains close to +0.9% to +1%.
No 3rd consecutive record for the moment on Wall Street which reopened on an indecisive note: but nothing is lost since the S&P500 only crumbles by -0.1% and the Nasdaq returns to record territory with +0 .15%, above 16,420 (it gained +2.5% over the past week).
Also note a welcome relaxation (-1%) of the ‘VIX’ which falls back into ‘complacency’ territory, around 12.8, or -11.2% over the week, which is spectacular, and even more so given the levels development at W-Street.
The temptation to take profits is great in the face of current high valuations, which could push operators to take some gains on current levels while waiting for new catalysts.
‘There will of course be a breathing space in the market. This is necessary after the spectacular rise at the start of the year,’ believes Christopher Dembik, investment strategy advisor at Pictet AM.
‘In the long term, we remain convinced that the underlying trend is upwards’, however, tempers the analyst.
A point of view shared by Alexandre Baradez, the head of market analysis at IG France, who is however not known to be the most ‘bullish’ (optimistic) strategist in the Parisian market.
According to the analyst, the potential for appreciation of the Parisian index still remains significant, with the aim being the more psychological than technical level of 10,000 points.
‘I obviously think that we will not go in a straight line on these levels but they are achievable objectives in the medium term,’ he told Cercle Finance.
If this last session of the week promises to be relatively light on economic data, investors will still focus on the Ifo business climate index in Germany, which was published in the morning.
The rise in the Ifo Business Climate Index (BCI), which rose from an upwardly revised 85.7 in February to 87.8 in March, is well above expectations (consensus 86, 0; CE 85.5) indicates Capital Economics. It is at its highest level since last June.
On the bond front, the Bunds ended the week well, with an easing of -7Pts towards 2.3250%, our OATs erased -4Pts towards 2.7980% and the Italian BTPs by only -3.5Pts towards 3.636%.
On the foreign exchange front, the Dollar continues to climb: +0.4% towards 1.0815 against the Euro, which lost 0.6% over the week.
This demonstrates a very different reading of Jerome Powell’s announcements on Wednesday evening: currency traders do not seem to adhere to the narrative of an ‘accommodating’ FED… because 3 rate cuts instead of 7 or 8 hoped for at the end of 2023, this ensures a return of 5% for another 2 quarters.
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