CAC 40: a note of caution to end the week

(CercleFinance.com) - The Paris Bourse is set to open in the red on Friday morning, as investors look set to end a cautious week marked by a further rate cut by the European Central Bank (ECB).


At around 8:15 a.m., the 'future' contract on the CAC 40 index - October delivery - was down 27.5 points at 7557.5, heralding a negative start to the session.

At this stage of the week, the flagship index has posted an anecdotal weekly gain of less than 0.1%, but the CAC can now claim a rise of over 6% since its August 5 low, and is now flirting again with the 7,600-point threshold.

The market was not surprised yesterday by the ECB's decision to cut rates for the second time in a row, but it did seem to appreciate the institution's more accommodating rhetoric, which points to a fourth rate cut in December.

Given the downside risks to both growth and inflation, the ECB's monetary policy should be eased at an accelerated pace, in order to remove its restrictive character as quickly as possible", insists Bruno Cavalier, economist at Oddo BHF.

Now that the ECB meeting is over, investors will have to start looking for concrete elements to give them a new direction.

No major economic indicators are scheduled for this final session of the week, with the possible exception of the latest US housing construction figures.

In China, gross domestic product (GDP) growth reached 4.6% year-on-year in the third quarter, according to data published Friday by the State Bureau of Statistics (BES).

While this performance was a little better than expected, it points to a slowdown in activity after the 4.7% growth recorded in the second quarter, economists point out.

Analysts believe that the earnings season could be the next catalyst for stock market indices to move higher.

The quarterly accounts of American Express, Procter & Gamble and SLB will be particularly closely watched across the Atlantic at lunchtime.

Last night, Netflix did better than expected for the third quarter, both in terms of earnings and new subscriptions, which saw it rise by more than 5% in after-market trading.

Prior to this, Wall Street had closed around equilibrium on Thursday evening, held back in particular by the strong tensions observed in the bond compartment.

With the presidential election looming in about two weeks' time, it would be no surprise if investors started to take some profits," says one trader.

"With the S&P 500 up 22% year-on-year at this stage, it would be foolish not to," he adds.

Volatility could be the order of the day on this day of the 'three witches', characterized by the expiry of a whole series of options and futures contracts.

On the energy market, oil prices confirmed their recovery as Israel announced the death of Yahya Sinouar, the leader of Hamas.

Brent crude rose 0.4% to $74.75, while US light crude (WTI) advanced 0.5% above $71 a barrel.

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