The Paris Bourse remains on a positive course. This upward trend reflects investors’ continued optimism about the future direction of interest rates.
The end of the week on the Paris Bourse remains positive. This trend is driven by investor optimism about the future direction of central bank interest rate policy for 2024, a sentiment that has persisted since November.
At around 10:40 a.m., the CAC 40 was up 0.62% at 7,356 points. This consolidates the flagship index’s excellent November performance, with an increase of 6.2%, the second best of the year. By 3 p.m., however, the trend had slowed to 0.22%, reaching 7,326.56 points.
The CAC 40 had ended Thursday up 0.59% at 7,310.77 points, the first close above the 7,300 mark since September 20.
“The markets are celebrating the stronger-than-expected slowdown in inflation in the eurozone and the United States since the end of the summer, while at the same time economic growth is not collapsing. Equity markets rebounded by almost 10% in November, and long yields have returned to their mid-September levels”, describe the analysts at La Banque Postale AM.
PMI indicator under scrutiny
Figures for manufacturing activity in the eurozone contradicted the forecasts initially made for November. The S&P Global PMI HCOB index stands at 44.2, exceeding the initial forecast of 43.8. The figures for France and Germany rose very slightly, from 42.8 to 42.9 and from 40.8 to 42.6 respectively.
“The manufacturing sector has contracted throughout the year in both Germany and France,” reminds CMC Markets analyst Michael Hewson, illustrating a “sclerotic” European economy.
Société Générale was down 0.9%, impacted by Morgan Stanley’s sell advice, which also reduced its price target. By contrast, Air Liquide, Vinci and Safran posted gains ranging from 0.4% to 1.7%, even reaching new all-time highs.
Lower central bank rates
Falling inflation in the US and the eurozone, with the latter’s overall consumer price index at 2.4%, its lowest in two years and only 0.4 points above the European Central Bank’s target, is reinforcing the trend. Investors are now anticipating rate cuts in 2024, with the US Federal Reserve likely to cut rates by almost 50% in March, up from around 20% a week ago.
“At present, the money market is expecting the European Central Bank to cut rates as early as March 2024. Until a few weeks ago, this was scheduled for June 2024. However, we’ll have to keep a close eye on Christine Lagarde’s speech at 2 p.m. (this Friday), which could dampen investors’ spirits,” says Christopher Dembik, Investment Strategy Advisor at Pictet AM.
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Featured photo : © CHINE NOUVELLE/SIPA
