(CercleFinance.com) – The Paris Stock Exchange started the session down on Tuesday morning after having lined up six consecutive sessions of increases, while investors were a little more cautious awaiting a speech from Jerome Powell, the chairman of the Fed. The CAC40 index drops 0.5% to 6871 points.
Tuesday promises to be devoid of economic statistics or results from leading companies and the market should therefore turn once again to the Federal Reserve.
Jerome Powell, the head of the institution, is due to speak this afternoon during a speech devoted to the theme of central bank independence at a symposium organized in Stockholm by the Riksbank, the central bank from Sweden.
Investors seem to be struggling to find elements allowing them to further push the New Year’s rally, which ended up bringing the CAC above the threshold of 6900 points yesterday.
This new rise brings the index’s gain since the start of the year to almost 6%, ie the best start to a stock market year in the last forty years.
‘This brief and sudden bullish movement always appears too fast, a temporary consolidation could come to slow down this extension somewhat’, warn analysts at Kiplink Finance.
“Such a temporization movement is very often beneficial for an extension of an upward trend and even more so when the CAC 40 index is rocked by euphoria like at the moment,” continues the asset manager.
In short, the Parisian market has gone so high, so strong and so fast that many investors now seem ready to take part of their profits.
However, the underlying upward trend does not seem to be really called into question.
Graphically, the CAC40 index emerged from the top of a major resistance zone between 6775 and 6850 points, which allows it to see a continuation of the upward sequence towards 6950 points, says Kiplink.
Investors indeed seem to want to bet on a soft landing for the economy, in the United States as in Europe, the most buoyant scenario for equities.
Moreover, the markets in Asia continue to grow strongly and could soon enter a ‘bull market’, an increase of 20% since the low point observed last October thanks to the reopening of the Chinese economy.
On Monday, US equity markets ended the session in disarray pending the release of the latest inflation figures later in the week and the start of the earnings season.
At the final bell, the Dow Jones yielded more than 0.3% while the Nasdaq Composite gained more than 0.6%.
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