CAC 40: risk aversion dominates after Wall Street

(CercleFinance.com) - The Paris Bourse is set to open sharply lower on Thursday morning, in the wake of Wall Street and a fresh avalanche of results, while the session will be marked by US growth figures.


At around 8:15 a.m., the 'future' contract - August delivery - was down 109 points at 7425.5 points, suggesting that the session will start below the major support level of 7500 points.

The Paris market ended yesterday down 1.1% at 7513 points, penalized by the sharp decline in luxury goods stocks following the disappointing quarterly results of LVMH.

Thursday's session will be marked by an impressive series of corporate results, but investors fear bad news that could accentuate the market's recent bout of weakness.

In Paris, the many publications released this morning are likely to be greeted with mixed reactions.

While Sanofi this morning raised its outlook for 2024, STMicroelectronics revised its outlook downwards, citing sluggishness on the part of its automotive customers.

Stellantis itself unveiled first-half results that the manufacturer deems 'not up to (its) expectations', reflecting both a difficult industrial context and operational difficulties.

Carrefour, Kering and Renault had already released their figures yesterday evening.

In Europe, several major stock market players such as Nestlé and Roche also presented their accounts this morning.

Wall Street's worst session of the year on Wednesday was dominated by the disappointing performances of Alphabet and Tesla, with sell-offs occurring on a broad front.

The Nasdaq tumbled by more than 3.6% under the effect of a powerful sell-off that heavily affected the "Magnificent Seven" and semiconductor stocks, which had been the driving force since late October 2023.

On the macroeconomic front, investors will have to examine a number of indicators, starting with the first estimate of US economic growth to be published at 2.30pm.

The consensus forecast is for 1.8% annualized growth in the second quarter.

Before that, the publication later this morning of Germany's Ifo business climate index could influence the trend.

Investors are also awaiting tomorrow's release of the PCE price index for the USA, the Federal Reserve's preferred measure of inflation.

On the bond market, German Bund yields are benefiting from the current climate of risk aversion, with the 10-year Bund stabilizing at around 2.44%.

On the other side of the Atlantic, T-Bond yields are tightening again, with the 10-year paper rising by almost five basis points to over 4.28%.

A further factor of uncertainty weighs on risk appetite with the downturn in oil prices.

The price of US light crude (West Texas Intermediate, WTI) for September delivery dropped 0.8% to $77, while Brent yielded 0.7% to $81.1.

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