The "3 Witches" session in gray mode in Paris, which is deteriorating against the trend of the US indices, as the CAC40 continues to slide, reaching -0.5% at 7,365, i.e. around -1.2% on a weekly basis.
The Paris Bourse had started this technical session well, with a gain of +0.5% on Friday morning, and a test of the 7,445 mark.
The CAC40 index thus fell back below 7,390pts (exit from the 7,400/7,470 corridor which has persisted since January 3) and once again seems to be validating a bearish scenario (return to Wednesday evening's expectations).

The week ended with a spectacular reversal in investors' expectations of the monetary easing favoured since the end of November.

However, Wall Street is clearly on a positive note: the Nasdaq-100 (+0.7%) broke a new all-time record above 17,100, the S&P500 gained +0.4% (to 4,800) and returned to the zenith of the 4,806 mark (this will be the best closing in history if it ends there), boosted by the strength of semiconductor manufacturers (+3.3% for the SOXX index on Thursday evening).
Ambient optimism is reinforced by the surge in the Michigan Confidence Index, which jumped +9pts to 78.8 this month, the highest since July 2021, whereas economists were forecasting a much less pronounced rise to around 70.
Over the past two months, sentiment has climbed by a total of 29%, its biggest two-month improvement since 1991, a period marked by the end of a recessionary phase", survey director Joanne Hsu points out in a press release.

The index is now just 7% off its all-time high reached in 1978.
The component of the survey measuring consumers' judgment of the current situation reached 83.3, compared with 73.3 the previous month, while that measuring their expectations rose to 75.9, after 67.4 in December.
One-year inflation expectations measured by the survey fell back to 2.9%, the lowest since the end of 2020, thus returning to the historical range of 2.3% to 3% that prevailed before the Covid epidemic.

This is the 'Goldilocks' scenario, falling right on time for the '3 Witches' session, with the January deadline concluding at the zenith on Wall Street, with even a +1.5% to +2% gain for the Nasdaq and S&P500 compared with the '4 Witches' of December 15.

We can truly speak of a remarkable resilience, as since the start of the week, the world's leading monetary policymakers have taken it in turns to push back the markets' timetable on the dates of the first rate cuts and the extent of the easing to be expected.

On Wednesday, market participants had to digest a hawkish speech by Christine Lagarde, who suggested that a rate cut would be "likely" in June.

These statements led to a sharp downward revision of rate expectations, particularly across the Atlantic where, according to CME's FedWatch barometer, traders now estimate that only 53.8% of them expect a rate cut in March, compared with 76.9% a week ago.

This is simply a classic technical repositioning after the negative sessions at the beginning of the week", moderates one analyst.

Bond markets have fallen sharply this week, and no rebound is in sight this Friday: the US '10-yr' is still down +2.5Pt at 4.1700%, or +25Pts over the past week, and the worst weekly performer since mid-October 2023, the '2-yr' is down +4Pts at 4.397%, or almost +30Pts over the week.
In Europe, Bunds and OATs are stuck on their highest levels of the week at 2.31% and 2.83% respectively.

We may see a small technical rebound with the publication of new US economic indicators, provided they are not too robust: sales of existing homes and the University of Michigan's consumer confidence index.
On the currency front, the Dollar loses back what it had gained the previous day, i.e. -0.1% to 103.40.
The Euro remains unchanged at $1.0875, while oil per barrel climbs 0.4% to $79.3 in London.
On the earnings front, investors will take note of the financial statements of oil and gas group SLB and insurer Travelers, before the season gets into full swing next week with the releases of numerous heavyweights such as J&J, Netflix, Tesla and Intel.





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