CAC 40: the 8,000-point threshold within reach

(CercleFinance.com) - The Paris Bourse is expected to open higher on Friday, with optimism in the air ahead of a busy session that will be marked, in particular, by the publication of the latest inflation data for the eurozone.


At around 8:15 a.m., the future contract on the CAC 40 index - end-of-month delivery - gained over 40 points to 7,981 points, meaning that the index could move a little closer to the 8,000-point threshold at the opening.

The Paris market looks set to start the first session of March in the green, following on from a very favorable February, which saw new records set.

Over the week as a whole, the Paris CAC 40 index is currently down by around 0.5%, after having gained more than 3% over the whole of February.

While the CAC has gained 5% since January 1, investors nevertheless seem to feel the need to digest this powerful upward movement while waiting to identify the next catalyst.

"European equities are now taking time to reflect on the extent of their gains since the start of the year", explains Florian Ielpo, Head of Macroeconomic Research at Lombard Odier Investment Managers.

On the macroeconomic front, the market will be keeping a close eye this morning on the PMI manufacturing activity indices, in the hope that these figures will confirm the slight upturn currently taking shape in European industry.

But investors will be watching above all, at 11:00 am, for the publication of preliminary inflation data for the eurozone, on the lookout for the slightest indication of the timing of the ECB's next rate cuts.

While disinflation is expected to pick up, price moderation is unlikely to be a sufficient argument for rapid monetary easing by the ECB, which meets next week.

On the bond market, easing remains the order of the day after the latest US inflation figures, which yesterday convinced investors that the rate-cutting cycle was approaching in the USA.

January PCE inflation confirms our view that the Fed's preferred measure of inflation will return to target levels by mid-year, which should allow the central bank to cut rates by more than investors currently expect," says Capital Economics.

The yield on ten-year Treasuries is down to 4.25%, while the German ten-year rate is easing to 2.41%.

It promises to be a lively afternoon on Wall Street too, with the release of the ISM Manufacturing PMI and the University of Michigan's Consumer Confidence Index.

While market participants may need new catalysts to maintain the momentum of recent weeks, the bullish trend remains intact in the markets, say strategists.

In these conditions, the recent peaks reached on the world's stock markets should be no more than a stepping stone on the way to a more enduring bullish wave, they add.

From a technical point of view, if the craze continues, the current rise in the CAC 40 could continue towards 8250 points before taking a breather", predict the teams at Admirals Group, a broker for retail and professional investors.

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