(CercleFinance.com) – The Paris Stock Exchange begins the session in the red, with investors still awaiting announcements from the ECB and inflation figures in the United States, which could influence the next decisions of the Fed. The CAC40 index is trading around 8090 points, down around 0.3%.
While no significant indicator is on today’s agenda, the mood should be one of pause, with investors especially keeping an eye on the ECB’s decisions expected on Thursday.
According to economists, the European Central Bank should keep its key rates unchanged and once again emphasize its ‘data-dependent’ approach.
The Frankfurt-based institute indeed seems reluctant to lower its rates before the American Federal Reserve, which increasingly seems to be considering reducing the cost of money this year.
Despite the hawkish messages adopted by several members of the Fed in recent times and economic indicators better than expected, the dynamics of the stock markets still remain favorable.
The CAC 40 index ended yesterday with a gain of 0.7% to 8119 points, a level still very close to its recent absolute record of 8253.6 points.
‘Investors seem to consider that the magnitude of the rate cut in the United States this year will have little influence as long as American growth outperforms the rest of the world and corporate results are there’, underlines Christopher Dembik, investment strategy advisor at Pictet AM.
However, more and more observers think that rates may not move until the fall.
In the United States, traders now only assess the probability of a rate cut in June as 51%, compared to 61% a week ago, according to the CME Group’s FedWatch barometer.
Besides the ECB, one of the big highlights of the week should therefore be the publication, tomorrow, of the latest American inflation figures, which investors will examine in search of clues on the timetable for rate cuts. future interest.
‘Barring an accident (…), the underlying trend is upward,’ assures Christopher Dembik.
Another element calling for caution, the sharp rise in indices since the start of the year is beginning to revive doubts among certain analysts about the valuation levels of shares.
‘The equity indices are at high levels (in terms of cost and performance), in unknown territory’, estimate the Apicil AM teams.
‘The positioning of investors (reading the flows on ETFs and the big players on futures) is clearly tense,’ adds the management company.
‘So far, the fear of not participating in the bull rally has driven capital towards the broader indices. It is now necessary to be more selective in terms of the sectors to play,’ warns Apicil.
In this delicate context, market participants currently favor gold, considered a safe haven in the face of uncertainties surrounding the evolution of rates in the United States and in Europe.
Although it fell yesterday, the CBOE VIX volatility index reached annual highs last week, which shows that operators are less and less confident about a continuation of the recent bullish rally.
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