CAC40: catches its breath after the records of 18 and 19/02

(CercleFinance.com) - The Paris Bourse (+0.
4% to 8,155) ends the month on a positive note (the CAC/Px1 'February' contract expires at 4 p.m., while the E-Stoxx50 has already done so).
The DAX40 index has broken no fewer than 16 absolute records since the previous '3 Witches' day on January 17, gaining 8% in 1 month.)
This euphoria on the German stock market is all the more worrying in view of the uncertainty surrounding this weekend's German elections.

For the week as a whole, the Paris market, which had returned to its all-time highs on Wednesday, is currently heading for a weekly loss of between 0.2% and 0.3%, likely to put an end to a series of five consecutive weeks of gains.

A small current of profit-taking is beginning to emerge after the strong upward movement at the start of the year, which led the CAC to fall back on Tuesday to within some thirty points of its all-time record set last year.

Investors seem to be caught between hopes of a possible peace agreement in Ukraine and solid corporate results, on the one hand, and economic uncertainties (mixed signals from the US, the rebounding tariffs soap opera), on the other.

Although fears of the pernicious effects of US protectionist policies on growth and inflation have eased in recent days, they are far from having completely disappeared.

Investors are desperately looking for a theme or catalyst to latch on to, and meanwhile the markets seem to be losing their way a little", observes Michael Brown, strategist at Pepperstone.

Risk appetite is also waning on Wall Street, where the S&P 500 index finished down 0.5% yesterday after setting new highs on Wednesday.

Investors are also tempted to err on the side of caution two days ahead of Germany's early parliamentary elections, to be held this Sunday.

Analysts fear the scenario of a political 'status quo', at a time when Europe's leading economy needs real reforms to boost growth.

The markets' greatest hope seems to be that the next German government will finally reform the debt brake rule that was created during the global financial crisis in 2009 to guarantee the country's financial stability", comments Lowie Debou, manager at DPAM.

This rule currently limits the German government's additional structural spending to 0.35% of GDP, a figure that most agree is insufficient to meet Germany's growing investment needs', he points out.

The prospect of the US AI chip giant's much-anticipated results, due next Wednesday, could also limit position-taking.

Meanwhile, investors took note of the 'flash' PMI activity indices for Europe.

France's HCOB composite flash PMI sank below the 50 mark for the month of February without change, highlighting a sharp deceleration in overall activity in the eurozone's second-largest economy.

The HCOB flash composite PMI index of overall activity in the eurozone held steady at 50.2 in February, highlighting continued growth over the month at a marginal pace.

Also on the agenda today are the Michigan consumer confidence index and US old home sales figures.

Renewed risk aversion has led to a timid improvement in bond yields, with rates easing on both sides of the Atlantic.

In the United States, the yield on 10-year Treasuries is back towards 4.50% following yesterday's disappointing indicators, which argue in favor of further monetary support.

With US rates on the decline, the dollar is struggling to maintain its upward trajectory, which has enabled the euro to climb back up to the 1.05 mark against the greenback.... but loses 0.3% to 1.0465 on Friday.

After four consecutive sessions of gains, the oil market retreated following yesterday's announcement of a drop in US crude inventories.

Brent gave up 0.3% below $76.3 a barrel, while US light crude (West Texas Intermediate, WTI) lost 0.3% to below $72.3

Gold consolidated by 0.3% at $2,946 an ounce, following the previous day's record highs, which sent it to within $30 of the psychological $3,000 threshold.

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