Market: a little more appetite for risky assets


(CercleFinance.com) – The Paris Stock Exchange is expected to extend its timid rebound that began the day before on Friday, pending the publication of monthly employment figures in the United States.

Around 8:15 a.m., the ‘future’ contract on the CAC 40 index – July delivery – gained 36.5 points to 7173 points, suggesting a positive start to the session.

After a difficult start to the week, the Parisian market had attempted a jump yesterday, which had allowed it to claim more than 0.5% to 7137 points at the final bell.

Over the week as a whole, the star index posted another 2.5% decline and confirmed the break of the major support at 7150 points.

The dissipation of the specter of a default of payment of the United States should however encourage investors to return to risky assets in this last session of the week.

The US Senate overnight approved a bill providing for the suspension of the US debt ceiling until 2025, thus ruling out the scenario of a default that would have dashed hopes of a soft landing for the economy.

The main meeting of the day will take place at 2:30 p.m., with the publication of the report on employment in May in the United States which will indicate whether the labor market is finally starting to show some signs of slowing down.

Economists predict around 190,000 job creations, after the 243,000 the previous month, while the average for the last twelve months is 222,000.

As in previous months, investors’ attention will be focused on wage growth, which has been accelerating steadily for a year.

A lower-than-expected figure could be welcomed by market participants as it would confirm the very high probability of an upcoming pause in Fed action.

The accumulation of signs of an economic slowdown has recently prompted investors to revise their expectations regarding the evolution of interest rates.

According to the CME Group’s FedWatch Barometer, markets are now pricing the odds of the Fed’s dovish status quo on June 14 at nearly 74%, up from less than 36% last week.

In this context, the New York Stock Exchange rebounded on Thursday, the publication of a manufacturing ISM below expectations having fueled hopes of a more cautious approach from the Federal Reserve.

The Dow Jones gained almost 0.5% to 33,062 points and the Nasdaq Composite climbed about 1.3% to 13,101 points.

If it favors the rise in equities, the prospect of a maintenance of the Fed’s rates translates into an easing of bond yields with a 10-year American which retreats towards 3.60%, close to a two-week low.

In Europe, its German equivalent lost one basis point, to 2.24%.

With the return of risk appetite, oil prices are on the rise again but they are heading for another week of declines in view of the uncertainties surrounding demand against a backdrop of slowing activity.

The July contract on American light crude (West Texas Intermediate, WTI) is currently taking 1%, to nearly 70.8 dollars a barrel, while Brent is also gaining 1%, to nearly 75 dollars.

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