(CercleFinance.com) – The Paris Stock Exchange is expected to open around breakeven on Monday morning, on optimism sparked by the easing of anti-Covid measures in China protecting the recent equity market rally.
Around 8:15 a.m., the futures contract on the CAC 40 index – delivery at the end of December – fell just 3.5 points to 6740 points, suggesting a relatively stable start to the session.
With a weekly gain of 0.4%, the past week will have seen the Parisian market validate a ninth consecutive week of increase and reduce its decline since the start of the year to less than 6%.
While the CAC has now ended up breaking its intermediate resistance of 6745 points, nothing seems to be able to thwart the bullish current in which the Parisian index has been evolving since the beginning of autumn.
While the upper levels of 6780 and 6815 points are approaching, the second important lock on the rise is at 6850 points, a major resistance par excellence that would free the CAC towards its peaks at the start of the year.
If China is still facing an upsurge in cases of contamination by the coronavirus, the hope that Beijing will begin to end its ‘zero Covid’ policy continues to benefit equities.
Several Chinese cities relaxed Covid-related traffic restrictions over the weekend, allowing Chinese stock markets to continue their recent recovery on Monday.
The Hang Seng Index, the flagship index of the Hong Kong Stock Exchange, posted gains of 4.2% at the end of trading today, while the CSI 300 index of mainland China large caps gained more than 1.8%. .
The week that opens today will give investors the opportunity to make their final adjustments to their positions while waiting for the next meeting of the Federal Reserve, scheduled for December 13 and 14.
This first session of the week will be punctuated, in Europe, by the results of the monthly surveys of purchasing managers (PMI) on the activity of services in the economies of the euro zone.
Last week’s manufacturing PMIs showed signs of a rebound and the services figures could in turn hold some pleasant surprises.
In the bond segment, the yield on ten-year US Treasury bonds stabilized in the 3.50% zone and European benchmark yields changed little, at 1.85% for the ten-year German Bund.
As for oil prices, they are moving up again as OPEC+ agreed on Sunday not to change its current production targets. On the NYMEX, the barrel of American light crude (WTI) nibbles 0.5% to 80.5 dollars.
As the deadline for the end of the year approaches, the traditional ‘Christmas rally’ could allow the CAC 40 to reduce its losses as much as possible for the 2022 financial year, or even completely erase its annual decline.
However, some strategists point out that the flagship index has already recovered more than 18% of its value since its annual low at the end of September, which they believe considerably limits its upside potential.
In a recent research note, the Invest Securities teams pointed out that this unbridled optimism, or at least this denial of reality, was beginning to seriously worry them.
‘The paradigm shift linked to the end of free money does not seem to be integrated at all, suggesting that the equity market bubble will be the last to deflate’, underlines the brokerage firm.
“The deflation of the crypto bubble after the bankruptcy of FTX did not even raise awareness, nor did the beginnings of a real estate crisis”, underlines the analysis office.
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