CAC 40: a calm start to the new year without Wall Street

(CercleFinance.com) - The Paris Bourse is expected to return to trading on Monday morning without any major trends, in what are likely to be low volumes due to the absence of investors as Wall Street closes for Labor Day.


At around 8:15 a.m., the future contract on the CAC 40 index - expiring in September - was down 0.5 points at 7649.5 points, suggesting almost perfect stability in early trading.

Reassured by the positive trend in inflation in Europe and the United States, the Paris market had gained more than 0.7% last week to post its fourth consecutive week of gains.

August, which saw the CAC index break through the 7620 resistance barrier, was marked by a 1.3% rise.

After such performances, investors may be tempted to catch their breath, especially as US equity markets will remain closed today for Labor Day, a factor usually synonymous with lacklustre trading on the Old Continent.

After the 'Labor Day' break, however, the week promises to be busier on Wall Street, with August's employment figures the highlight, perhaps determining the course of the Federal Reserve's monetary policy.

As the next Fed meeting approaches, investors seem increasingly convinced that falling inflation and a slowing labour market will lead the central bank to introduce measures to support the economy.

The markets are hoping for a positive reading of the statistics, after the disappointment of the previous month, which led them to envisage a possible recession in the United States and sent stock market indices reeling.

According to economists, the US economy should have created around 155,000 jobs last month, compared with 114,000 in July.

According to analysts, these figures should determine whether the Fed will open its rate-cutting cycle with a 25 or 50 basis point cut in just over two weeks' time.

"The market is waiting (...) to see whether the Fed will initiate significant rate cuts, reflecting either an emergency approach or a gradual adjustment approach", explains Florian Ielpo, Head of Macroeconomic Research at Lombard Odier Investment Managers.

Ahead of Friday's climax, traders will today be taking note of the final eurozone PMI indices for the manufacturing sector, which should confirm the slowdown in activity also perceptible in China, which has weighed on all Asian stock markets.

The Purchasing Managers' Index (PMI) for China's manufacturing sector stood at 49.1 in August, down from 49.4 the previous month, due to the impact of heat waves and thunderstorms, according to the State Bureau of Statistics (BES).

In the wake of this lacklustre data, the Hang Seng index of the Hong Kong stock exchange lost 1.6% at the end of the session, while the CSI 300 of the main stocks listed in Shanghai and Shenzhen dropped more than 1%.

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