CAC40: a correction begins as interest rates come under pressure

(CercleFinance.com) - The Paris Bourse is further down (-1.
1% to 8,115, or -100pts in a few hours), a decline that raises questions given the hopes of a resolution to the conflict in Ukraine.
The E-Stoxx50 index fared no better with -1.1% at 5,473pts, while the DAX40 set its 17th all-time record at 22,935 before completely reversing course and dropping -1.5% in a straight line to give up -1.3% to -1.4% at 22,535 (-400pts in a handful of hours).
On Wall Street, no new all-time highs were set: the S&P500 and Nasdaq-100 (at their zenith the previous day) fell by -0.2% to -0.3%, while the Dow Jones remained at equilibrium.

Yesterday, the Paris market managed to post its seventh consecutive session of gains, even though questions remain as to the content of the peace agreement currently being prepared by Washington and Moscow in Riyadh.
Today, concern prevails, with Brussels reaffirming its intention to maintain sanctions against Russia.
If the Ukrainian issue now overshadows that of trade tensions, investors may well begin to relegate the geopolitical situation to second place in view of the economic agenda for the next few days.

Traders have just discovered a 9.8% fall in US housing starts in January compared with the previous month, to an annualized rate of 1,366,000.

U.S. building permits - which are supposed to predict future housing starts - were flat (+0.1%) at 1,483,000 last month. Finally, housing completions climbed by 7.6% to 1,651,000.
Wall Street will tonight (8pm) take note of the "minutes" of the Fed's last meeting on January 28 and 29, on the lookout for any indications as to the timing of future rate cuts in the United States.

At the end of last month's meeting, the Fed decided to leave monetary policy unchanged, in order to give itself more time to assess inflation trends and the economic impact of the Trump administration taking office.

According to the CME Group's FedWatch barometer, market participants expect the next rate cut to take place in July, but with a 43.9% probability of a rate cut, beating the 42.9% probability of a "status quo" by a narrow margin.

On the US bond front, calm reigns, with yields varying only marginally: +1 basis point on T-Bonds at 4.555%.
On the other hand, OATs and Bunds are seriously deteriorating, with +7.6 and +6 basis points respectively at 3.234% and 2.552%, while Italian BTPs are tightening by +9 basis points at 3.637%.
The euro is not benefiting from this and is down 0.15% at $1.0435.

In Paris, professionals will also be turning their attention to corporate results scheduled between now and the end of the week, in the hope that any good surprises will enable the CAC to beat its records.

The publications of heavyweights such as Airbus, Renault and Schneider Electric, scheduled for tomorrow morning, are generating a certain amount of anticipation, as is that of Air Liquide, scheduled for Friday.

Oil prices rose for the third consecutive session, buoyed by the strike on a Russian oil pipeline by Ukrainian drones, which could cut Kazakhstan's oil exports by 30%.

Brent North Sea crude gained 0.4% to $76.1, while the March contract for US light crude (West Texas Intermediate, WTI) gained 0.4% to $72.1 a barrel.

While calm prevailed on the foreign exchange market, gold returned to its highs of $2,945, as the easing of the situation in Ukraine did not seem to diminish interest in the yellow metal.

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