The Paris Bourse continued its decline on Wednesday morning ahead of US retail sales figures, and as doubts about a rapid rate cut grew ever more pressing. The CAC 40 index fell by 1.1% to 7320 points.

The Paris market had already ended yesterday's session 0.2% lower at 7398 points, recording its fifth fall in six sessions and breaking through its key support at 7410 points.

Clearly, doubts are resurfacing about the imminence of a Fed rate cut at the end of March: the consensus, which was over 77% before the weekend, now stands at 63% according to the FedWatch barometer.

In Europe too, the ECB seems very reluctant to let investors expect a rate cut before next autumn, whereas many had hoped for one at the start of the second half of the year.

According to the money market, a rate cut in March is now estimated at only 29%, compared with 43% before the weekend.

'It was inevitable. The discrepancy between market expectations regarding the extent of rate cuts in 2024 and the rhetoric of central bankers is increasing uncertainty on the stock markets, leading to a downturn in indices", explains Christopher Dembik, Investment Strategy Advisor at Pictet AM.

On the Old Continent, Christine Lagarde, President of the European Central Bank (ECB), is due to speak this Wednesday at the Davos Economic Forum.

'Unfortunately, those hoping to get a clearer picture from next week's ECB meeting are likely to be disappointed', warns Christopher Dembik

'The institution will certainly blow hot and cold regarding its intentions. It will wait for the Fed to make up its mind and for it to have more statistics on inflation before coming up with a timetable, in our opinion", stresses the analyst.

Investors are now awaiting US retail sales data, due out at 2.30pm, to gauge consumer spending over the strategic Christmas period.

A slowdown in US consumer spending has been expected for some time, but has yet to materialize, due to the rise in credit costs and the weakening labor market.

After the 0.3% rebound recorded in November, a further increase in sales (+0.4%) is expected in December.

Investors took note of consumer prices in the UK and the eurozone.

According to Eurostat, annual inflation in the eurozone stood at 2.9% in December 2023, compared with 2.4% in November. A year earlier, it was 9.2%.

The UK consumer price index rose by 4% in the 12 months to December 2023, an annual rate up from 3.9% in November, according to the Office for National Statistics (ONS).

On the value side, a fresh round of corporate releases is expected to drive trading, starting with the results of US aluminum producer Alcoa.

Copyright (c) 2024 CercleFinance.com. All rights reserved.