(CercleFinance.com) – The Paris Stock Exchange should open slightly lower on Monday morning, a large part of investors seeming to want to stay back from the rating at the start of a busy week on the front of central banks.
Around 8:15 am, the ‘futures’ contract on the CAC 40 index – December delivery – fell 34 points to 6645 points, announcing a cautious start to the day, in line with the decline signed last week (-1.2%).
The coming week promises to be the last busy sequence of a year 2022 which will have seen the major central banks switch for good towards monetary tightening, with obviously unfavorable effects on the equity markets.
Despite its powerful fall rebound, the Parisian market still shows a decline of around 6.6% since the start of the year.
Faced with inflation that is struggling to come down, the major central banks have little choice but to continue to move forward in raising their interest rates.
The US Federal Reserve and the European Central Bank, whose monetary decisions will fall on Wednesday and Thursday respectively, seem doomed to maintain a restrictive posture for their last meeting of the year.
In the United States, the Fed has started to discuss the opportunity to slow the pace of rate hikes, but the strength of the latest economic indicators has called into question the appropriateness of a ‘pause’.
As far as the ECB is concerned, the debate does not yet seem completely settled, even if inflation in the euro zone set new records in October.
While a slower rate-tightening pace is a possibility after the meeting scheduled for this week, several members of the Governing Council are still advocating for vigorous rate hikes of 75 basis points.
It is above all the words chosen by the Federal Reserve and the ECB to evoke the main lines of their policy for 2023 (calendar, pace, criteria) that will interest the markets.
Investors will also remain attentive to the burst of indicators expected in the coming days, particularly in the United States where the latest inflation figures will appear tomorrow.
In Europe, investors will follow the latest PMI surveys at the end of the week, which will show whether companies on the Old Continent continue to benefit from the decline in energy prices and the easing of supply tensions.
While macroeconomic data remains firmly tilted towards recession, the recent easing of anti-Covid measures in China could perhaps provide them with a small ray of hope.
As PIMCO teams recently reminded us, a significant recovery in Chinese economic activity in 2023 would help improve the picture of global growth.
The investment manager specializing in fixed income, however, reminds that caution must remain in order given that the path to the reopening of the Chinese economy is “far from clear”.
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