Cautious trading is anticipated at the Paris Stock Exchange as investors await crucial U.S. inflation data, with the CAC 40 index showing a slight increase. This year, the market has performed well, outpacing the S&P 500. Upcoming consumer price index figures are expected to influence monetary policy, while trade policies under the new U.S. administration may affect inflation metrics. Additionally, fluctuations in the euro, crude oil prices, and gold are noted amidst ongoing economic assessments.
Paris Stock Exchange Anticipates Cautious Trading
The Paris Stock Exchange is set to open with a sense of caution on Wednesday as investors eagerly await the latest American inflation data, which could significantly influence market trends for the day ahead.
At around 8:15 AM, the CAC 40 index’s February futures contract showed an uptick of ten points, reaching 8046.5 points. This indicates a potential continuation of the positive momentum that has characterized the market since the start of the week.
Key Economic Indicators and Their Implications
The Paris market has demonstrated strong performance this year, buoyed by technical buybacks and optimistic projections regarding economic recovery in Europe. Notably, the CAC 40 has seen an impressive increase of over 8% since the beginning of January, outperforming the S&P 500, which has only risen 3% in the same timeframe.
Meanwhile, the STOXX Europe 600 index has been achieving record highs over the past month, alongside the German DAX, which has already surged by more than 10% this year.
Investors are keenly awaiting the release of the consumer price index (CPI) for January, scheduled for 2:30 PM. This data is crucial as there are growing concerns about persistent inflation in the U.S., which may prompt the Federal Reserve to reconsider its monetary policy. Economists project a year-on-year inflation figure of 2.9%, unchanged from December, while the core CPI is anticipated to be 3.1%, reflecting a slight deceleration from the previous month.
Future reports may be impacted by the implementation of recent customs tariffs, especially if the protectionist measures initiated by the new U.S. administration against Canada and Mexico remain in place. Analysts have pointed out that these two nations account for a significant portion of U.S. food imports, which could influence CPI calculations.
As the new administration’s trade policies unfold, investors remain watchful, with expectations that there will be no rate cuts from the Federal Reserve until at least July. This outlook was reinforced by Fed Chairman Jerome Powell, who indicated that there is no immediate need to adjust rates, given the current economic stability.
Powell is scheduled to continue his testimony before U.S. lawmakers, which could further impact market sentiment. Following slight fluctuations on Wall Street the previous day, futures for major indices suggest a stable or slightly declining opening, although the upcoming CPI data could alter this trajectory.
Additionally, the latest consumer price statistics are poised to influence the U.S. dollar and bond yields. The yield on 10-year Treasuries experienced a rise of four basis points, exceeding 4.53%, following Powell’s remarks in Washington.
In the foreign exchange market, the euro is attempting to stabilize against the dollar, hovering around 1.0360 after experiencing three consecutive days of decline. In the commodities sector, crude oil prices are witnessing a slight decline after their recent rebound, with Brent oil down 0.4% to $76.7 and WTI falling to $73. Furthermore, gold is facing profit-taking after achieving record highs, decreasing by 0.6% to $2915.3 per ounce following a dip below $2900 yesterday.