(CercleFinance.com) – The Paris Stock Exchange is expected to be around balance on Wednesday morning in a climate that remains wait-and-see on the eve of the Easter long weekend.
Around 8:15 a.m., the ‘futures’ contract on the CAC 40 index – April delivery – is trading at 8200.5 points, down six points, suggesting an opening without any real trend.
Investors are remaining cautious and holding firm on their positions before the Easter weekend, which will see the Paris market close for Good Friday and then Easter Monday.
Since its records last week, the CAC seems to be looking for a direction, visibly stuck within a narrow range of fluctuations ranging from 8150 to 8185 points.
The inability of the flagship index to get closer to its major resistance zone, located at 8250 points, clearly illustrates the lack of conviction among investors.
Recent highs recorded by stock markets around the world have brought already high valuations to strained levels, believe some investment strategy managers.
‘Most of the performance of the equity markets since the start of the year, and even over the last 18 months, is due to the expansion of valuation multiples’, underline the JPMorgan teams.
‘At the global level, 12-month forecast profits have increased by only 7% compared to their lowest levels, while the price/earnings ratio (PER) has increased by almost 30%’, underlines the bank American.
At 21.4x expected profits, the PER of American stocks is up 6% year-on-year, 20% since October 2023 and 30% since October 2022, notes JPMorgan.
In Europe, European price/earnings ratios show similar levels, indicates the New York firm, although starting from a much lower starting point.
These high valuations risk preventing a further rise and condemning markets to tread water if they are not accompanied by profit growth, strategists warn.
‘Our concern is that earnings growth will prove disappointing,’ warns JPMorgan.
Investors now seem to be waiting for new signs of good health in the economy and confirmation of the decline in inflation to continue the upward movement underway since the fall.
With this in mind, the markets will focus their attention on Friday on the statistics of American household income and spending, which will be accompanied by the ‘PCE’ component of prices, the Fed’s preferred measure of inflation.
The good news for investors is that Goldman Sachs raised its target on the STOXX Europe 600 index by 6% on Monday, against a backdrop of reaccelerating growth and monetary easing, which still shows a potential increase of 6%. % over 12 months.
In addition to the 8250 points mark, which remains the obstacle of the moment, the CAC could thus move towards the psychological threshold of 8500 points, before tackling the resistance zone of 8700 points in the longer term.
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