CAC 40: investors prepare for a busy session

(CercleFinance.com) - The Paris Bourse is set to open slightly higher on Wednesday morning, ahead of a session packed with corporate publications and inflation-related indicators.


At around 8:15 a.m., the future contract on the CAC 40 index - for January delivery - was up 21.5 points at 7448 points, pointing to a continuation of the timid advance posted the previous day (+0.2%).

Gaps should remain limited, however, as investors prepare for a hectic second half of the week, with a flurry of earnings releases and an intense macroeconomic agenda.

Global equity markets have been moving without a clear direction since the start of the year, held back by uncertainties surrounding the evolution of the Fed's monetary policy and the agenda that Donald Trump, the next US President, plans to adopt on trade issues.

Yesterday, however, traders did not seem reassured by reports that the New York businessman's teams were preparing a plan for a "gradual" increase in tariffs.

The session that is about to begin could give them a chance to put their ideas back into place, thanks in particular to the 4th-quarter results of the major US banks Citi, JPMorgan, Goldman Sachs and Wells Fargo, expected at lunchtime.

These releases will give investors a clearer picture of the current state of the US economy, the strength of consumer spending and the country's economic outlook.

The markets are also awaiting a series of inflation indicators, culminating in December's consumer price figures, due at 2.30pm.

Investors will be keeping a close eye on these statistics, which may well determine the course of the Federal Reserve's monetary policy in the months ahead.

The consensus forecast is for a further acceleration in overall CPI to 2.9% year-on-year, from 2.7% in November, while core CPI growth is expected to stagnate at 3.3%.

In the meantime, markets will have been keeping a close eye on the latest inflation figures for France, the UK and Spain, which are also likely to show a revival in prices, albeit less marked than in the US.

Benchmark bond yields, which have been closely watched of late, are evolving in contrasting directions, with the US ten-year falling back towards 4.78%, while its German equivalent is tightening by four basis points to 2.63%.

French OATs rose by just one basis point to 3.47%, after François Bayrou's general policy speech failed to raise an outcry from the opposition, raising hopes that his government could escape censure.

As a result, the France/Germany spread has narrowed to around 84 points.

In the spotlight for the past week, the yield on ten-year British Gilts has risen by a further 0.6 points to 4.96%, although it has managed to remain below the symbolic 5% mark.

Oil prices are moving back up towards their highest levels since August, due to the recent sanctions imposed by Washington on the Russian energy sector, which will force China and India to find alternative sources of supply.

Brent crude is up 0.6% this morning to nearly $80.4 a barrel, and US light crude is up 0.8% to $78.1 a barrel.

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