(CercleFinance.com) – The Paris Stock Exchange should start in a slight decline on Tuesday morning in a market that promises to be tight pending the semi-annual speech by the President of the Fed to the American Congress.
Around 8:15 a.m., the ‘future’ contract on the CAC 40 index – delivery at the end of March – fell five points to 7374 points, suggesting an uncertain opening.
By winning more than 0.3% yesterday, the Parisian market managed to establish a new historical record, beyond 7400 points, but its upward trend could be called into question by the many meetings scheduled for this week.
Given the rise of almost 14% recorded by the CAC since the beginning of the year, players seem to be waiting for the slightest signal to start reaping their profits, a warning that could well come from the Fed.
On this point, investors will largely have to deal with today, since Fed Chairman Jerome Powell will speak from 4:00 p.m. (Paris time) before the Financial Services Committee of the House of Representatives.
After the rather conciliatory statements made by some members of the institution, investors are waiting to be reassured about the Fed’s intentions in terms of interest rates and economic prospects.
Raphael Bostic, the president of the Atlanta Fed, reinforced the hopes of the markets last week by mentioning an imminent pause in the hikes of key rates if the process of disinflation were to continue.
Traders generally expect Powell to reaffirm his willingness to continue the Fed’s restrictive policy until the ebb in inflation becomes tangible.
‘Pending Friday’s U.S. jobs report, he will likely try to balance progress on slowing inflation, without job cuts, and the need for continued rate hikes both that the risks linked to inflation remain on the upside”, predict the teams of Danske Bank.
The boss of the Fed should, however, beware of giving too explicit a signal on the extent of the rate hike which will be decided at the end of the next meeting on March 22.
In Europe, the figures for industrial orders in Germany, which will be published in the morning, could also influence the trend on the markets.
Sentiment in the industry has improved for a few months on the other side of the Rhine, but it remains in the contraction zone and the statistics should come out lower.
On the interest rate market, yields on sovereign bonds are struggling to fall back, which tends to confirm the thesis that the rate hikes orchestrated by the major central banks are continuing at a rapid pace.
After initially falling sharply yesterday morning, the yield of the German Bund abruptly reversed steam to recover more than 10 percentage points to 2.74%.
Ditto for the ten-year American, which returned towards 3.94% yesterday before regaining ground beyond 3.98% overnight.
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