(CercleFinance.com) – After having chained two sessions of decline, the Paris Bourse should open without a clear trend on Thursday pending a new series of economic indicators likely to influence the next monetary policy decisions.
Around 8:15 a.m., the ‘future’ contract on the CAC 40 index – expiring in September – is virtually unchanged at 6222.5 points, suggesting a start to the session at or near balance.
This penultimate session of the week will be animated by numerous statistics in the United States, with among others the Empire State index of the New York Fed, the Philadelphia Fed index, retail sales and the latest industrial production figures.
These statistics should not fail to fuel the ongoing debate on the Federal Reserve’s rate hike, which remains the number one concern of the markets, with the corollary of the strengthening of the dollar and bond yields.
At this stage, the US economy is proving more resilient than expected, but the August Consumer Price Index report revealed that inflation would take longer than expected to subside.
Until inflation figures show signs of lasting easing, the Fed – and its European counterpart the ECB – will remain determined to ignore downside risks to activity, analysts in unison warn .
‘The tightening of financial conditions in the United States and the higher trajectory of the fed funds rate suggest (…) that the path to a soft landing continues to narrow and that a recession in the United States is more likely unlikely over the next 12 months,” warn Tiffany Wilding and Allison Boxer, economists at PIMCO.
The New York Stock Exchange recovered on Wednesday only a small part of the losses incurred the day before with the shock of inflation: the Dow Jones gleaned 0.1%, while the Nasdaq Composite recovered a little more by 0.7%.
In Asia, a slight decline in the yen was behind a modest rebound on the Tokyo Stock Exchange on Thursday (+0.2%), but the CSI 300 index of the largest Chinese companies listed in Shanghai and Shenzhen fell back by 1.3%.
In France, the final results of the consumer price index for the month of August will be released by INSEE at 8:45 a.m. They should show inflation confirmed at +6.5% on an annual basis.
On the bond market, the generalized monetary tightening is pushing sovereign yields up and the yield on 10-year US Treasury bonds remains at levels close to their annual highs, around 3.41%.
As a result, equity market valuations are now seen as less attractive, leading many strategists, starting with those at Pictet Wealth Management, to advise underweighting global equities.
In this difficult context, the Parisian market is holding up quite well and succeeded yesterday in limiting its decline (-0.4%) towards 6222 points, thus maintaining itself above its support level of 6150 points.
Nothing crippling, say analysts, unlike the scenario of sales ‘at all costs’ which could be observed Tuesday on US stocks following the disappointing inflation figures.
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