CAC 40: tech titans set to take center stage

(CercleFinance.com) - The Paris Bourse is set to open higher on Monday morning, as it awaits the first earnings releases from the US tech giants, which could well revive a sluggish market trend that has been underway for almost a month.


At around 8.15am, the future contract on the CAC 40 index - for delivery at the end of April - climbed 47.5 points to 7997.5 points, suggesting that the day could start in the green.

Earnings season will be in full swing in the US this week, with results from tech titans Microsoft, Meta Platforms and Alphabet likely to give the markets a second wind.

The trend on the world's stock markets has become very gloomy since the all-time highs set at the end of March, due to rising bond yields, and strong performances would go a long way to reassuring investors.

The Nasdaq, the benchmark index for the US high-tech sector, fell by 5.5% over the past week alone, bringing its losses over the past two weeks to 7%.

"We believe that the recent risk-averse environment and correction in technology stocks represents a clear buying opportunity ahead of the upcoming earnings season", says Dan Ives, analyst at Wedbush Securities.

The earnings season that opens this week should indeed smile on the US tech sector, which is currently benefiting from strong capital spending in AI, cloud or cyber security.

We believe the Q1 accounts will be a major positive catalyst for the sector, and expect tech stocks to rise a further 15% after their strong start to the year", adds Dan Ives.

The question is whether strong results will be enough to drive the 'Magnificent Seven', which have already outperformed the market by a wide margin in recent months and are trading at high valuations, even higher.

Last week, Netflix published figures that were broadly in line with expectations, but this did not prevent the share price from dropping 9% after soaring in recent months.

Beyond the results, investors will continue to keep an eye on inflation with the release on Friday of the PCE index in the USA, the Fed's preferred indicator of price dynamics.

Before that, the publication - on Thursday - of the first US gross domestic product (GDP) figures for the first quarter will be closely watched.

The consensus forecasts a slight slowdown in growth, to 2.9%, after the 3.4% recorded in the fourth quarter.

The week will also be enlivened by the preliminary figures from the PMI surveys on the private sector in Europe, which could well show a slight improvement in business confidence in this early spring.

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