CAC40: timid rebound before the US holiday season

(CercleFinance.com) - The Paris Bourse got off to a positive start on Monday morning, on the eve of a week that promises to be rather light on the markets due to the American Thanksgiving holiday.
The CAC40 index is trading up 0.3% at 7,280 points, extending the timid rebound begun in the last two sessions.

The Paris market had ended Friday with a 0.6% gain at 7,255 points, but was still down 0.3% for the week, its fifth straight week of declines.

On Wall Street, the week will be shortened this week as US equity markets will be closed on Thursday and will only reopen for half a session on Friday.

This time of year, traditionally marked by low trading volumes, is generally characterized by a continuation of the trends seen in previous weeks.

European investors are hoping that the quiet week ahead in New York will provide an opportunity to catch up with the US markets.

The S&P 500 index has outperformed the Euro STOXX 50 over the same period by more than five times since the start of the year.

While market participants reacted little to the recent upsurge in tensions linked to the Ukrainian conflict, they remain on the lookout for any new developments concerning the health of the Old Continent's economy.

Against this backdrop, they will be paying close attention on Friday to the latest eurozone inflation figures for November, which should confirm that a return to the ECB's 2% target is imminent.

"The ECB will have no choice but to adopt a more accommodating stance in the face of the zone's cyclical challenges, which will normalize cyclical inflation", believes Alexandre Hezez, strategist at Richelieu Group.

More aggressive rate cuts than expected could lead to a further weakening of the euro, already back to two-year lows against the dollar last week, and at the same time restore some color to European export stocks.

Germany's Ifo business climate index, which was released this morning, confirms the difficult times currently facing Europe's leading economy, a factor which is also behind the underperformance of European equities.

After rebounding in October after four consecutive months of decline, the business climate index fell again in the month just ended to 85.7, compared with 86.5 last month. Economists were forecasting a figure of around 86.

On Wall Street, investors will be paying close attention on Wednesday to the second estimate of US GDP for the third quarter, which came in at 2.8% on first reading, before heading off for the Thanksgiving weekend.

But on Thursday, they will also be focusing on the release of PCE inflation figures, the Federal Reserve's favorite indicator of price dynamics.

These figures, along with the minutes of the Federal Reserve's latest monetary policy meeting due on Tuesday, could reinforce or, on the contrary, weaken the scenario of a rate cut in December.

The retail sector is also likely to attract investors' attention on Friday, with the "Black Friday" shopping extravaganza designed to gauge the state of consumer spending in the run-up to the crucial holiday season.

Among the companies yet to publish their quarterly results, American groups Dell, HP, Autodesk, Best Buy and Abercrombie & Fitch are scheduled to unveil their accounts on Tuesday.

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