The Paris Stock Exchange should open in the red on Monday morning, amid caution while awaiting the quarterly results of American technology heavyweights and the monetary policy meetings of the major central banks.
Around 8:15 a.m., the ‘futures’ contract on the CAC 40 index – expiring in February – dropped 54.5 points to 7892 points, announcing a sort of breathing space after the spectacular rebound initiated in recent weeks.
Supported by a catch-up movement after its clear underperformance last year, the Parisian market has had a thunderous start to the year, posting gains of more than 7% since January 1st.
Over the past week alone, the CAC gained 2.8%, returning above the threshold of 7,900 points, thanks to PMI having given a glimpse of a glimmer of hope concerning the European economy and the absence massive new American customs duties aimed at the economies of the Old Continent.
This irresistible rebound – which has just resulted in an unprecedented series of nine consecutive sessions of progress – will however be confronted with several important tests in the days to come.
Investors are indeed preparing for a busy and potentially decisive week with the monetary policy decisions of the Federal Reserve and the Fed, which will be interspersed with an avalanche of results in the American ‘tech’ sector.
Microsoft, the second largest market capitalization in the world behind Nvidia, will publish its accounts on Wednesday evening, at the same time as Tesla and Meta, before Apple does the same on Thursday evening.
The publications of the ‘tech’ giants will be particularly scrutinized as investors ask questions about the already strained valuations of the Nasdaq, which has returned to levels close to its records.
‘We expect a very strong season from tech, knowing that our recent outreach to companies highlights huge activity going into 2025, which sees technology directors strengthening their strategies and platforms in AI’, explains Dan Ives, analyst at Wedbush Securities.
-The week will certainly be the most intense of the results season, since 102 components of the S&P 500 index in the United States and 53 companies in the Europe STOXX 600 index will reveal their financial performances in the coming days.
The week will also be marked by the Fed’s monetary policy meeting on Tuesday and Wednesday, while the European Central Bank (ECB) follows on Thursday.
No rate change is expected from the American central bank, but the comments of its boss, Jerome Powell, will be closely followed while the new president Donald Trump has made it clear that he will ask the institution to lower its rates.
As for the ECB, which has more room to maneuver in its monetary easing cycle, markets are wondering whether it will adopt a conciliatory rate that would help to consolidate the recent recovery of the markets.
‘In the short term, the ECB is the only one capable of giving impetus to the euro zone’s recovery via the credit cycle,’ Bruno Cavalier, chief economist of Oddo BHF, recently recalled.
The agenda also promises to be very dense in terms of indicators, since the speakers will take turns to take note of the Ifo business climate index in Germany today, the first estimate of GDP in the euro zone in the 4th quarter Thursday and the first inflation figures in France and Germany for the month of January on Friday.
In the United States, a first estimate of American growth for the 4th quarter is expected on Thursday, then the PCE inflation index – the Fed’s preferred price measurement tool – on Friday.
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