CAC 40: green dominates in the wake of New York and Asia

(CercleFinance.com) - The Paris Bourse is set to continue its advance on Tuesday morning, following in the footsteps of Wall Street and Asia, as equity markets remain buoyed by growing optimism on growth and earnings, but above all by the undiminished strength of technology stocks.


At around 8:15 a.m., the future contract on the CAC 40 index - December delivery - was up 26.5 points at 7,461.5, suggesting a green start to the session.

The Paris market had closed Monday's session up 0.6% at 7413 points, giving it a cumulative gain of 1.3% in four sessions and erasing a large part of the losses incurred over the first two weeks of the year.

Traders continue to position themselves as buyers ahead of a busy week, which will be marked by European PMI figures tomorrow, followed by the ECB meeting and US growth figures on Thursday.

It seems that investors want to jump on the bullish bandwagon after realizing that they missed out on the recent rally, while the outlook for growth and inflation is improving more than expected", explain analysts at Danske Bank.

In the immediate term, European equities should benefit from the recovery of Chinese stock markets, which have benefited from rumors that Beijing is putting in place support measures to bolster stock markets.

The CSI 300 index of leading Chinese stocks recovered 0.5% on Tuesday after hitting five-year lows the previous day.

In Tokyo, the Nikkei index was down 0.1%, but remains close to 34-year highs as the Bank of Japan (BoJ) unsurprisingly maintained its ultra-accommodative monetary policy.

Activity in Europe promises to be very quiet on the statistics front today, but could be enlivened by announcements on the results front, such as those from Ericsson, which this morning unveiled a heavy loss due to restructuring charges.

On the other side of the Atlantic, Johnson & Johnson, Procter & Gamble, Netflix, Verizon, Texas Instruments, General Electric, Lockheed Martin and Halliburton are due to publish their accounts today.

Thanks to the dynamism of the technology sector, Wall Street broke new records again on Monday, following a disappointing index of indicators, likely to prompt the Federal Reserve to loosen its monetary policy.

Christopher Dembik, Investment Strategy Advisor at Pictet AM, comments: "It seems that the markets are resilient and that nothing is likely to cause them to fall for long.

"At most, we can expect some profit-taking at the end of the week if the ECB meeting disappoints, which is highly likely," he adds.

All this confirms that equities are a must, whatever the state of the cycle and the current risks, if we are looking for yield", concludes the analyst.

Fixed-income markets remain calm, with European yields sensitive to monetary policy expectations moving little as we await the ECB's announcements.

The yield on the German ten-year is easing below the 2.30% threshold, while that on US Treasuries of the same maturity is easing to around 4.10%.

There was little movement on the foreign exchange market either, although the euro halted its slide against the dollar, returning to around 1.0915 against the dollar with two days to go before the ECB meeting.

On the energy market, oil prices rallied in the face of tensions in the Red Sea, with a barrel of US light crude (WTI) gaining 2.4% to $75.2, while Brent advanced more modestly by 0.1% to $80.1.

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