(CercleFinance.com) – The Paris Stock Exchange is expected to rise slightly on Monday morning, as the markets are due to get into the heart of the matter with the publication of results for the second quarter this week.
Around 8:15 a.m., the ‘future’ contract on the CAC 40 index – now passed on the August deadline – rose by 51.5 points to 6083.5 points, announcing an opening in positive territory.
Investors are preparing for a busy and potentially decisive week with an avalanche of quarterly results, which will be interspersed with the monetary policy decision of the European Central Bank (ECB).
After a disastrous first part of the year, equity markets regained some momentum last week, thanks in particular to an upturn in the bond market.
But European stock markets continue to show signs of weakness after dropping 17% on average from their January highs, their worst start to the year since 2008.
BofA analysts warn that European indices are unlikely to regain favorable momentum until economic growth bottoms out, which they expect to happen in the first quarter of 2023.
Moreover, investors do not seem to want to commit too much before the real start of the ‘season’ of quarterly results, expected in the coming days.
They fear serious disappointments on the performance of companies, but also on their prospects, in a context of rising costs and slowing demand which proves to be penalizing for margins.
In fact, the profits of the companies making up the S&P 500 index are only expected to rise slightly by 4% in the second quarter according to FactSet, a figure lower than that which was forecast three months ago.
Nearly 73 companies in the S&P 500, including seven components of the Dow Jones, are to publish their results this week, starting with a few heavyweights such as IBM, Johnson & Johnson and Netflix.
The two banking giants Goldman Sachs and Bank of America will unveil their accounts today at lunchtime.
In addition to this flurry of results, the week will be marked by the meeting of the Governing Council of the ECB, which will make its monetary policy decision on Thursday.
The central bank is expected to raise rates by 25 basis points, its first since 2011, as inflation continues to break records in Europe.
The ECB is also expected to detail the details of its ‘anti-fragmentation’ plan intended to limit the yield spread between German government bonds and those of southern Europe.
As the European economy begins to seriously suffer from higher energy prices, the diagnosis established by the ECB and its President Christine Lagarde will be closely watched by investors.
S&P Global’s flash PMI indices for the month of July for the main eurozone economies, due out on Friday, should also provide valuable indications of the current pace of growth.
Due to an ebb in new orders from the manufacturing sector, the downward trend in PMIs continued in all eurozone countries in June and investors want to know if these indicators are now approaching the threshold fateful 50 points, separating contraction from expansion of activity.
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