CAC 40: investors wait with bated breath ahead of ECB meeting

(CercleFinance.com) - The Paris Bourse is set to open with little change on Thursday, a few hours ahead of the European Central Bank's (ECB) decisions on a further rate cut.


At around 8.15am, the October-delivered future contract on the CAC 40 index was up three points at 7,498 points, heralding a tightly-controlled start to the session.

Investors should avoid taking too strong a position as they await the ECB's monetary policy announcements at 2.15pm, followed by the traditional press conference by President Christine Lagarde at 2.30pm.

With the Frankfurt-based institution widely expected to cut rates by one percentage point, investors will be paying close attention to Christine Lagarde's comments, looking for the slightest hint of future rate cuts, even if she should avoid committing herself too much to a future timetable.

We doubt that the ECB meeting will be a positive driver for equities today", warns Christopher Dembik, Investment Strategy Advisor at Pictet AM, who believes that everything points to a more pronounced 50 basis point cut.

The slowness with which the cost of money is falling in the eurozone is a problem for companies, particularly small and medium-sized ones, which are faced with far from favorable financing conditions in a context of shrinking margins and falling demand", the analyst points out.

Recent indicators, in particular the latest PMI figures, have highlighted the slowdown in the European economy, accentuated by Germany's current difficulties.

The latest consumer price figures, due at 11:00 am, should also confirm that inflation is back below the ECB's 2% target.

In this respect, investors seem to have already fully integrated the scenario of a further 25 basis point rate cut in December.

Wall Street finished higher on Wednesday evening, with the Dow Jones index recording its best-ever close at 43,075 points.

The US session will be animated by numerous statistics, the Columbus Day holiday on Monday having prompted many administrations to postpone the release of indicators until today.

On today's agenda are retail sales figures, unemployment benefit registrations
, the Philadelphia Fed index, industrial production and business inventories.

Benchmark bond yields in the euro zone are falling as the ECB awaits its decisions: 2.18% for the ten-year German Bund and 2.92% for the French OAT with the same maturity.

On the currency markets, the euro was little changed at $1.0855, but could react to the ECB's decisions depending on their content and scope.

Oil rallied a little before the afternoon announcement of US oil inventories, and despite signs of the beginning of a lull in the Middle East.

Brent crude (+0.2%) is trading close to $74.4 a barrel, and US light crude (+0.3%) around $70.6.

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