Paris Stock Exchange is expected to experience a slight decline as investors await key U.S. inflation and eurozone industrial production data. The CAC 40 futures have dropped, reflecting cautious market sentiment after recent losses. Wall Street showed mixed results amid economic growth concerns, with analysts warning of potential market volatility. Important indicators, including the Producer Price Index and jobless claims, are set for release, while European stocks may lose momentum following recent highs. Oil prices are also falling due to economic activity worries in the U.S.
Paris Stock Exchange Set for a Slight Decline
The Paris Stock Exchange is poised for a minor downturn on Thursday morning as investors await crucial data on U.S. inflation and industrial production figures from the eurozone.
As of 8:15 AM, the futures contract for the CAC 40 index, set for March delivery, has dipped by 7.5 points to 7988 points, indicating a modest decline in early trading activity.
The cautious sentiment that has prevailed since last Friday, resulting in three consecutive days of losses, shifted yesterday to a measured increase in risk appetite. This change came in response to the U.S. inflation report, which suggested a possible slowdown, thereby raising hopes for potential monetary easing.
Despite this optimism, Wall Street concluded the previous night with mixed results, as the trading session highlighted a tug-of-war between sellers and bargain hunters. At the closing bell, the Dow Jones slipped by 0.2%, the S&P 500 increased by 0.5%, and the Nasdaq climbed by 1.2%, buoyed by significant gains in Tesla (+7.6%), Palantir (+7.2%), and Nvidia (+6.5%).
Market Insights and Economic Indicators
However, it wouldn’t be surprising if New York experiences its fourth consecutive weekly decline this week. Concerns regarding economic growth are overshadowing the notion that stocks have reverted to a bargain state.
Michael Brown, a strategist at Pepperstone, expressed caution, stating, “What strikes me is that the indices simply cannot hold their gains at the moment, which resonates as a warning signal for anyone looking to take advantage of market weakness.” He further emphasized that ongoing trade uncertainties are likely to lead to rebounds followed by pullbacks.
Despite the recent market turbulence, the CBOE volatility index, often referred to as “the fear index,” has not yet exceeded the critical 30-point mark, indicating that panic among participants remains subdued.
Looking ahead, the health of the U.S. economy will significantly influence stock market dynamics, with investors hoping for a recession-free future.
Key indicators to watch today include the Producer Price Index (PPI), which is scheduled for release at 2:30 PM. Positive figures could prompt the Federal Reserve to accelerate rate cuts. Additionally, weekly jobless claims, also due at 2:30 PM, will provide insights into the labor market, particularly in light of job cuts in the public sector initiated by Elon Musk.
In the eurozone, the monthly industrial production data will be released at 11:00 AM, with the consensus forecasting a month-on-month rebound of 0.6% for January.
As investors await new support levels in U.S. markets, the rally witnessed in European markets over recent months may start to lose momentum. Some analysts caution about a potential pullback, noting that several major indices in Europe have recently reached historical highs. Christopher Dembik, an investment strategy advisor at Pictet AM, warns, “Even if European stocks are performing strongly, a pronounced drop in U.S. stocks will eventually ripple through to European stocks, often more violently.”
Additionally, Wall Street may face turbulence due to the lack of agreement between Democrats and Republicans on raising the U.S. debt ceiling ahead of Saturday. Without a resolution, the world’s largest economy could face a technical default, a scenario that would be detrimental to the U.S. at this critical juncture.
In the bond market, the OAT/Bund spread narrowed significantly yesterday to under 68 basis points, following a downgrade of the Bund, which is approaching the 2.90% threshold, while OATs eased by two points to 3.57%.
On the currency front, the dollar is recovering against the euro, despite inflation figures falling short of expectations, which has calmed investor fears regarding a potential rate cut as early as June.
In the commodities market, oil prices are declining once again after three successive days of gains, driven by concerns about economic activity in the United States. Brent crude has dropped by 0.1% to just below $70.9, while Texas WTI has fallen by 0.2% to under $67.6.