CAC 40: after Trump, bullish momentum maintained by the Fed

(CercleFinance.com) - The Paris Bourse is expected to open slightly higher on Friday morning, amid growing optimism in the wake of the US Federal Reserve's latest meeting, which resulted in a further rate cut.


At around 8:15 a.m., futures on the CAC 40 index - November delivery - were up 22.5 points at 7452 points, heralding a green start to the session.

As expected, last night the Fed cut its main key interest rate by a quarter point, its second cut in less than two months, while refraining from providing too many clues as to its intentions for the coming months.

However, its members decided unanimously to cut the main key rate, citing tame inflation trending towards 2% and the need to avert the risks of a slowdown in growth, even though it is admittedly "progressing at a steady pace".

Michael Brown, strategist at Pepperstone, commented: "My basic scenario remains that the committee will continue to cut rates by 25 basis points at the end of the next few meetings, until a neutral rate of around 3% is reached next summer.

As a result, the bullish rally continued last night on Wall Street, with a new deluge of absolute records, notably for the Nasdaq Composite, which is inching ever closer to the psychological 20,000-point mark.

International equity markets should thus maintain the momentum of recent days, born of Donald Trump's victory in the US presidential election.

From an analyst's point of view, Wall Street's favorable momentum should pick up again, particularly with the prospect of more advantageous taxation for US companies.

'In our view, Trump's second term will be marked by lower corporate taxes, deregulation of the technology sector, the introduction of tariffs designed to stimulate the US industrial sector and relocation, and policies to support crypto-currencies', points out Yan Taw Boon, manager at Neuberger Berman.

With Donald Trump signaling his intention to impose lighter, more flexible regulations for the sector, Bitcoin set a new record above $76,000 last night, and some already see it reaching the 10,000-point threshold in the near future.

The fact that the S&P 500, the benchmark index for US fund managers, is within reach of the historic 6,000-point level should also encourage investors to consider a further short-term bullish push.

Comforted by Wall Street's reaction to Trump's victory and the Fed's still accommodative stance, the Paris Bourse is currently heading for a gain of just over 0.2% on the week.

On the other hand, the day promises to be rather quiet in terms of indicators, even though investors will learn about Michigan's consumer confidence index in the afternoon.

With the employment situation still solid on the other side of the Atlantic, inflation tending to moderate and stock market indices moving at record levels, US household morale should logically remain buoyant.

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