(CercleFinance.com) – After its spectacular rebound last week, the Paris Stock Exchange should mark time on Monday morning as the results season draws to a close and no major economic indicator is on the agenda for the next days.
Around 8:15 a.m., the ‘future’ contract – November delivery – on the CAC 40 index gained 0.5 points to 7056 points, suggesting an opening at or almost in balance.
After a fortnight animated by meetings of the major central banks, this new week promises to be much calmer, which could offer investors a welcome respite to digest the latest monetary policy announcements.
By adopting a more patient speech last Wednesday, the Federal Reserve granted the markets’ wishes by lowering bond yields.
Investors also appreciated Friday’s employment figures, which showed that the US economy was driven by a ‘goldilocks’ economy, characterized by better controlled inflation and growth too fast or too slow.
After months of uncertainty, the normalization of monetary policies seems poised to emerge as the dominant theme at the end of 2023.
‘A possible stabilization of interest rates would bode well for the equity markets,’ promises Michael Halloran, strategist at Janney Montgomery Scott.
This good climate allowed Wall Street to record its strongest weekly increase since the start of the year, with strong scores of between 5.2% and 7.5% over the whole week.
In Paris, the return of the buying movement allowed the CAC 40 to gain 3.9% over the past week and to forcefully recross the thresholds of 6800, 6900 then 7000 points.
At the same time, the sharp fall in yields has made stocks much more attractive to investors.
After reaching its highest level in 16 years, above 5%, the yield on American government bonds ended the past week at around 4.50%.
In terms of results, 82% of S&P 500 companies that have so far published their quarterly accounts have done better than expected, compared to an average of 74% over ten years, which again constitutes a supporting factor for the rating.
The only downside is that the European economy today seems in much worse shape than in the United States and many analysts are warning that the euro zone will be in recession, at a technical minimum, in the second half of 2023.
‘Even though stocks are currently boosted, macroeconomic forecasts are pessimistic, which could negatively affect corporate profits in the coming months,’ warns Swiss private bank J. Safra Sarasin.
From this point of view, the PMI indices in the services sector, expected in the morning, should confirm the sluggishness of activity on the Old Continent, the only encouraging point concerning the decline in inflation.
‘Beyond that, the picture is rather gloomy’, warn the teams at La Financière de l’Echiquier.
‘Not only is the current level of activity deteriorating but above all the outlook is poorly oriented, given the collapse in demand, which is starting to have negative consequences for employment’, worries the stockbroking company Parisian.
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