CAC40: in touch with 7600, S&P500 and Dow Jones records

(CercleFinance.com) - The Paris Bourse stagnated in the red for a long time (-0.
2% to -0.3% until around 2:30 pm, after -0.5% around 1 pm) before reversing course and climbing symmetrically by +0.3% to 7,602pts (in the wake of Stellantis, Airbus and Safran).

The Euro-Stoxx50 confirms that it has broken through the 5,000 barrier, at 5,040 (close to the record 5,070 set on September 27), in the wake of Wall Street, where numerous records are falling, starting with the S&P500 with +0.6%.

The broad index opened the week with a bullish gap to a new all-time high of 5,857 points, while the Dow Jones also broke a record above 42,980 points (its Friday closing record was 42,863).

The Nasdaq was not to be outdone, with a flamboyant +0.6% to 18.460, close to its July 10 record of 18,647, in the wake of Nvidia, Marvell and Applied Materials (not forgetting the psychological impact of 'Space-X with the gentle recovery of a nearly 200-ton launch vehicle component from its launch pad).

Investors are now feeling more confident in Europe ahead of a meeting of the European Central Bank (ECB) scheduled for Thursday, where further rate cuts are likely to be confirmed.

After a difficult summer, the world's stock markets have returned to the upside over the last two months, buoyed by the prospect of decisions by both the Fed and the ECB likely to support economic activity.

Since August 6, the CAC40 has rallied by more than 6.5%, a favorable trend which should persist ahead of the ECB's monetary policy decisions to be announced on Thursday.

Many observers believe that the poor European figures published recently - led by the PMI - should prompt the ECB to accelerate its rate cuts.

With the disinflation process continuing, ECB rate cut expectations now point to the prospect of a further 25bp rate cut this week, followed by another in December.

Fiscal policies are taking a restrictive turn", points out Bruno Cavalier, Chief Economist at Oddo BHF.

"Under these conditions, why maintain a restrictive monetary policy?" asks the analyst.

The results season, which kicked off last Friday with the major US banks, should also set the pace for the coming sessions.

This week's agenda includes publications from Dutch semiconductor equipment giant ASML and video-on-demand platform Netflix.

In addition to central banks and earnings, US retail sales figures, due on Wednesday, are also likely to move markets.

Investors' eyes will also turn to Beijing, from where Chinese gross domestic product (GDP) figures will be released on Thursday, giving valuable clues as to the state of the economy in the world's second-largest economy, which is currently undergoing a major stimulus plan.

On the bond market, the yield on ten-year US government bonds, which had reached new highs since the end of July last week at 4.11%, set a new record at 4.14% with Wall Street's full risk-on.

Bunds remained stable a few days ahead of the European Central Bank's (ECB) monetary policy meeting, with the benchmark German ten-year yield up +1Pt to 2.284%, our OATs symbolically down -0.5Pt to 3.0390, and Spanish 'Bonos' easing -2Pts to 3.003%.

On the foreign exchange market, the euro is virtually unchanged against the dollar (down -0.2% at 1.0915), against a backdrop of questions about the Fed's next rate cuts and uncertainty surrounding next month's presidential election.

Oil prices are down -1.6% to $77.5 a barrel in London, and WTI is down -1.5% to $74.4 on the NYMEX... but caution remains the order of the day as we await a possible counter-attack by Israel following Hezbollah's recent strikes on a military base near Haifa.

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