CAC40: loss of 1.4% to start the 4th quarter

( – The Paris Stock Exchange got off to a bad start to its 4th quarter (it was the ‘4 witches’ on Friday) and lost almost 1.4% at the close below 7,300 Points (to 7,276).

Wall Street has reopened without direction: the Dow Jones and the Nasdaq remain perfectly stable but the S&P500 gains 0.2%.

The CAC40 is clearly weighed down by the -12% of Société Générale (at 23.3E) whose objectives disappoint, as well as the announcement of a less generous dividend distribution.

More generally (because the Euro-Stoxx50 also drops -1.2% to 4,242), investors are staying away from risky assets 2 days before the highly anticipated announcements from the Federal Reserve.

This consolidation comes after 2 sessions of strong increases, despite interest rate markets deteriorating in the meantime, after a fleeting tip of the hat to the scenario of rates stabilized at 4.00% for a few quarters.

There is little suspense regarding the Fed’s monetary policy decision on Wednesday: it should in all likelihood (FedWatch consensus of 99%) opt for a ‘status quo’ in terms of its rates.

‘This choice is due to the fact that inflation and the labor market are both moving in the right direction from the Fed’s point of view, making further rate hikes less necessary,’ explains Commerzbank.

But investors are above all waiting to read the projections and statements from Jerome Powell, the president of the institution, which could foreshadow an increase in early November.

In the opinion of analysts, the +35% rise in oil prices observed since the end of summer, as well as the good health of the American economy, risks pushing the Fed to maintain a restrictive approach.

Alongside the Fed’s decisions, markets are awaiting decisions in the coming days from the Bank of Japan and the Bank of England, which is expected to announce a further rate tightening of 25 basis points on Thursday.

The weekend in Europe will also be punctuated by the results of the monthly surveys of purchasing managers (PMI) on activity in the private sector of the euro zone economies.

Recent data tends to suggest that Germany, the region’s largest economy, has already entered into recession and that France could soon follow suit.

While caution is likely to limit risk-taking, the oil sector should still benefit from the continued rise in crude prices, driven by signs of recovery in China and the resilience of the American economy.

The price of a barrel of Brent rose another 0.5% to $94.75 while American light crude (West Texas Intermediate, WTI) also rose, around $91.6, the highest since November. 2022.

On the bond front, the 4th quarter also got off to a bad start with +4 base points on our OATs and on Bunds at 3.256% and 2.709% respectively.

Italian BTPs are up +5.5 points at 4.516%, it’s starting to get very tight!

The US T-Bons limit the breakage with +1Pt to 4.332%… but the ’10 years’ tested 4.36% during the session: annual ceiling retraced to the nearest tenth!

The Dollar is not giving up and remains at its recent highs at 1.0675.

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