2024 - CAC40: calm session in the absence of indicators

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(CercleFinance.com) – The Paris Stock Exchange started on a weak note Wednesday morning following the solid gains made the day before, at the start of a session that promises to be calm in the absence of leading indicators. The CAC 40 index lost 0.5% to 7,560 points.

By posting a 1.3% increase yesterday, the Parisian market proved to be the main beneficiary of the Chinese recovery plan which boosted the luxury sector, allowing it to rise above the 7,600 point threshold in high volumes.

This solid performance suggests that the expected consolidation after the rebound that began in September may not be imminent and that the Paris stock market will continue its momentum.

‘The Chinese monetary stimulus has obviously caused a wave of optimism on the stock market, knowing that it echoes a larger-than-expected rate cut by the US Federal Reserve last week,’ explains Christopher Dembik, investment strategy advisor at Pictet AM.

“But this wave of optimism could quickly lead to profit-taking and a brutal return to reality,” warns the analyst.

Opinions differ on the direction that equity markets will take, with some professionals betting on a favorable climate for risky assets thanks to the monetary easing underway, while others warn of a risk of a stock market relapse.

“It remains to be seen whether lower rates will boost economic growth, which is a key driver of earnings,” said Cesar Perez Ruiz, chief investment officer at Pictet Wealth Management.

The professional says he is mainly concerned about the profit warnings that have multiplied in recent weeks and about a geopolitical context that remains tense.

“The upside potential of stocks therefore appears limited to us and we are aiming for a transfer of liquidity to bonds,” says César Perez Ruiz.

Although the markets are beginning to show some signs of fatigue, they are holding up rather well for the moment, as illustrated by the new records set yesterday by Wall Street.

Also buoyed by support measures in China, the Dow Jones index posted a minimal increase of 0.2%, but sufficient to allow it to set new highs, while the Nasdaq gained 0.6% thanks to the rebound of Nvidia (+5%).

If the expected Wednesday session is calm in the absence of indicators or events likely to make the indices react, investors should hesitate to take strong positions before the important meetings of the coming days.

Investors will be watching closely on Friday for the release of the U.S. consumer price index (PCE), the Fed’s preferred gauge of inflation.

Despite the rise in stocks in Europe and New York, the government bond market remains unstable, continuing its trend of the past week.

After a new batch of disappointing economic indicators, the yield on the ten-year German Bund fell slightly towards 2.14% while its French equivalent eased towards 2.91%.

The yield on ten-year US Treasury bonds followed suit, stabilizing at around 3.73%.

Oil prices are moving to one-month highs, supported by both optimism about the revival of activity in China and the resurgence of geopolitical tension with the Israeli strikes carried out in Lebanon against Hezbollah, supported by Iran.

Brent fell this morning by less than 0.2% to $75.10 per barrel and American light crude (West Texas Intermediate, WTI) fell more significantly by 0.5% to $71.2.

Supported by the fall of the dollar and geopolitical tensions, the price of an ounce of gold is setting record after record and is still up 0.1% to $2,679.7 per ounce this morning. Its increase over the whole year is now approaching 43%.

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