(CercleFinance.com) – The Paris Stock Exchange continued its decline on Wednesday morning before the figures on retail sales in the United States and while doubts surrounding a rapid drop in rates became more and more pressing. The CAC 40 index fell by 1.1% to 7,320 points.
The Parisian market had already ended yesterday’s session with a decline of 0.2% to 7398 points, to achieve a fifth decline in six sessions and to penetrate its important support of 7410 points.
Clearly, doubt is re-emerging regarding the imminence of a Fed rate cut at the end of March: the consensus which was more than 77% before the weekend is now at 63% according to the FedWatch barometer.
In Europe too, the ECB seems very reluctant to let investors expect a rate cut before next fall, while many were hoping for it at the start of the second half of the year.
According to the money market, a rate cut in March is now only estimated at 29%, compared to 43% before the weekend.
‘It was inevitable. The gap between market expectations concerning the extent of rate cuts in 2024 and the speeches of central bankers increases uncertainty on the stock markets, which leads to a decline in the indices, explains Christopher Dembik, strategy advisor. investment at Pictet AM.
On the Old Continent, Christine Lagarde, the president of the European Central Bank (ECB), is due to speak this Wednesday at the Davos economic forum.
‘Unfortunately, those who hope to see things more clearly with the ECB meeting next week risk being disappointed,’ warns Christopher Dembik
‘The institution will certainly blow hot and cold regarding its intentions. She will wait for the Fed to make a decision and for it to have more statistics concerning inflation to move forward on a timetable, in our opinion,’ underlines the analyst.
Investors are now awaiting data on retail sales in the United States, which will be released at 2:30 p.m., in order to gauge the evolution of consumption during the strategic Christmas period.
With the rise in the cost of credit and the weakening of the labor market, a slowdown in American consumption has been expected for some time but has not yet materialized.
After the rebound of 0.3% which was recorded in November, a further increase in sales (+0.4%) is anticipated in December.
Investors have taken note of consumer prices in the United Kingdom and the euro zone.
The annual inflation rate in the euro zone stood at 2.9% in December 2023 according to Eurostat, compared to 2.4% in November. A year earlier, it was 9.2%.
The UK consumer price index increased by 4% in the 12 months ending December 2023, an annual rate increase from 3.9% in November, according to the National Statistics Office (ONS).
On the stock side, a new round of company publications should also liven up discussions, starting with the results of the American aluminum producer Alcoa.
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