CAC 40: transitional session, calm maintained

(CercleFinance.com) - The Paris Bourse is set to extend its rebound on Wednesday morning, with optimism about corporate earnings currently outweighing concerns about the Fed's policy evolution.


At around 8:15 a.m., the future contract on the CAC 40 index was trading at 8076.5 points, up 15 points, pointing to a continuation of the rally begun at the start of the week.

After a tricky start to April, investors are once again showing a certain appetite for risky assets, and seem to have forgotten for a while the worries surrounding the reawakening of inflation in the United States and the uncertainty surrounding future rate cuts.

In Europe and on Wall Street, the season of quarterly corporate accounts has so far been well received, even if the major US technology groups have yet to publish.

Tesla jumped over 13% this morning in after-hours trading, as the lacklustre first-quarter results published last night by the electric vehicle manufacturer were well anticipated by Wall Street.

This fragile return to calm enabled the CAC 40 to climb back above the important 8,000 and 8,100 point thresholds in quick succession, and is now just over a hundred points, or just over 1%, from its all-time closing record of 8,205 points set at the end of March.

In a sign of the markets' new-found serenity, the yield on ten-year US Treasuries, which is closely watched by the markets, is easing slightly to the 4.60% mark.

These rather reassuring signals are helping to push equities gently higher in markets that remain nervous, however.

Some strategists are still cautious: in a study published at the beginning of the week, JPMorgan warns against a "tipping over" of the equity markets, which they consider too "complacent" with regard to current valuation levels.

In particular, the US investment bank says it is concerned about the markets' lack of ability to identify potential bearish catalysts, low volatility, persistent inflation, tightening credit conditions and geopolitical tensions.

Today's session, which can be seen as a transition day before Microsoft and Alphabet's results and the leading economic indicators to be released at the end of the week, will be driven by, among other things, US durable goods orders figures.

While confidence in the US industrial sector has recently shown some signs of improvement, the underlying trend is still likely to remain stagnant, according to specialists.

In Germany, the Ifo index - expected later this morning - should benefit from the fall in energy prices, but weak demand should continue to weigh on the statistics.

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