The Palais Brongniart, former headquarters of the Paris Stock Exchange. (credit: L. Grassin)
(CercleFinance.com) – The Paris Bourse should slow down Wednesday at the start of the session after its sharp rebound the day before, which allowed the CAC 40 to rise above 6570 points in a context marked by a return of the appetite for risk.
Around 8:15 am, the ‘future’ contract on the CAC 40 index – delivery October – yielded 62.5 points to 6,512.5 points, signaling a particularly cautious opening.
Yesterday, the Parisian market had inexorably amplified its gains over the hours to finish with an increase of 1.5% to 6576 points, that is to say at the high of the day, on the basis of around 3.5 billion euros in trade.
The wave of cheap buying after the fall of September also benefited Wall Street, although the US markets failed to match the performance of Europe.
At the final bell, the Dow Jones posted a rather sluggish rebound of 0.9%, while the Nasdaq Composite gained more than 1.2%.
In Asia, the Tokyo Stock Exchange continued its bearish momentum on Wednesday (-0.9%), further accentuating its large divergence with New York.
Still poisoned by the Evergrande affair, Hong Kong’s Hang Seng index lost 0.5%, while mainland Chinese stock markets remained closed.
According to some observers, the recent downturn in the stock markets shows an overreaction to fears related to the rise in interest rates, soaring energy prices and the situation in China.
According to them, the massive declines undergone since the beginning of the autumn give hope for the emergence of a more favorable scenario, which could allow attention to be shifted to the fundamentals, that is to say the results and the economy.
Many indicators are expected during the session, with the publication of retail sales in the euro zone which will provide more information on the recovery in consumption.
Investors will also watch the survey on private employment in the United States, which will be published in the early afternoon by the firm ADP, two days before the official report expected Friday.
It remains to be seen whether the players’ appetite for risk will wane or whether the next earnings season (which will begin next week) will, on the contrary, allow it to strengthen.
‘The three main favorable winds for equities (earnings growth, money printing and tax stimulus) are weakening,’ admit the teams at Generali Investments.
‘But we still find equities cheap compared to bonds and we return to a stronger’ value ‘bias,’ analysts at the Italian insurer explain.