CAC 40: a wait-and-see attitude before the Fed minutes

(CercleFinance.com) - The Paris Bourse is set to open slightly lower on Wednesday, in a cautious mood ahead of the release later this evening of the minutes of the US Federal Reserve's latest monetary policy meeting.


At around 8:15 a.m., the 'future' contract on the CAC 40 index - for delivery at the end of January - was trading at 7480.5 points, down 16 points, which seems to herald a wait-and-see start to the session.

After jumping 2.2% on Monday, the Paris market continued its upward momentum yesterday, gaining 0.6% to 7489 points, marking one of the most impressive bullish sequences since mid-September.

Expected at 8:00 p.m., the minutes of the Fed's December 17-18 meeting, at the end of which the central bank cut rates by a quarter, will be closely watched by investors.

The document should reveal more about the evolution of debates within the FOMC, the institution's monetary policy committee, as well as the future trajectory of its rate cuts.

The market is caught between contradictory discourses. While Fed Chairman Jerome Powell advocates caution and the entry into a "new phase" marked by fewer easing measures, other members have been a little more voluntarist.

For the time being, traders are not anticipating another rate cut before June, and a second by the end of the year, but the "minutes" could shed new light on the Fed's intentions, and even rekindle speculation of three rate cuts by 2025.

Meanwhile, in the early afternoon, the market will have taken note of the ADP survey on private-sector employment, followed by weekly US jobless claims figures, which should confirm the strength of the US labor market.

Investors will also be paying close attention to the morning release of industrial producer prices in the eurozone and industrial orders in Germany.

On Wall Street, the major New York indices ended in the red on Tuesday, penalized by profit-taking in technology and consumer stocks, which had performed well in recent months.

At the close, the Dow Jones gave up 0.6%, the S&P 500 1.2% and the Nasdaq around 1.9%.

On the bond front, the yield on 10-year US Treasuries advanced by 6.5 basis points to 4.68%, after crossing the 4.70% threshold last night as European stock markets closed in the wake of solid economic indicators in the US (ISM and JOLTS).

Eurozone bond yields followed suit, with the ten-year German Bund rising to 2.47% and the French OAT to 3.30%.

After its bout of weakness the previous day, due to the robustness of US statistics, the euro is trying to stabilize as it awaits the Fed's "minutes", trading at around $1.0345.

Oil prices are continuing their upward trajectory, with Brent above $77 a barrel (+0.4%) and US light crude (West Texas Intermediate, WTI) approaching $75 (+0.6%)

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