CAC 40: between fears and hopes while waiting for Nvidia

(CercleFinance.com) - The Paris Bourse is set to open slightly higher on Wednesday morning, against a cautious backdrop ahead of tonight's publication of Nvidia's eagerly-awaited quarterly results, the quality of which could dictate stock market trends over the coming days.


At around 8:15 a.m., the future contract on the CAC 40 index - expiring in March - was up 34.5 points at 8102.5 points, suggesting a timid rebound after two sessions in the red.

The Paris market ended yesterday's session down 0.5% at 8,051 points, as the absence of positive catalysts once again prevented it from reaching its previous record highs, which are still just over 2% from current levels.

Investors are reluctant to buy on the dips", notes Pepperstone strategist Michael Brown in a note, pointing to a "lack of conviction" on the part of market participants.

For the past ten days, European and American equity markets have been struggling to find a clear direction, torn between hopes of a peace agreement in Ukraine and growing uncertainties about the global economy.

The S&P 500 index last night posted its fourth consecutive session of declines, a series unseen since the start of the year.

As for the Nasdaq Composite, it has just suffered losses in excess of 1% over the last three sessions, an event not seen since last August.

Against this cautious backdrop, the CBOE Volatility Index, also known as the "fear barometer", yesterday lurched above the 20-point threshold, considered an uncomfortable level, before calming down a little towards the end of the session.

Investors' nerves will be sorely tested this evening by the quarterly results of Nvidia, the last of the 'Magnificent Seven' to publish its accounts.

Enthusiasm for AI-related stocks has waned of late, due to the unexpected emergence of the low-cost Chinese application DeepSeek and rumours of a downward revision of Microsoft's investments in the field.

In fact, it's the chipmaker's outlook that will be most closely watched, with analysts keen to know whether the Californian group can maintain its gross margin of over 75%, at a time when competition in the sector is clearly intensifying.

Given that Nvidia alone accounts for 8% of the Nasdaq 100 index and over 6% of the S&P 500, its performance should have a major influence on the stock market over the next few days.

According to the professionals, the options market is forecasting volatility of 8.5% in its share price on both the upside and the downside, which means that the market's reaction is bound to be spectacular.

In addition to the results, investors will continue to monitor economic developments in Europe and the USA, even if there are few statistics on today's agenda.

On the indicators agenda, however, are the figures for new home sales and weekly oil inventories in the USA.

On the currency markets, the euro is attempting to cling to the 1.05 mark against the dollar in the wake of the disappointing statistics of recent days, which have reinforced the prospect of Fed action.

According to the FedWatch barometer, a majority of traders (53.7%) now expect a further rate cut in June, compared with 48.8% previously.

The bond market rallied accordingly, with the yield on 10-year Treasuries now below 4.30%, the lowest in over two months.

The trend of risk aversion is much less evident in Europe, where the yield on 10-year German Bunds is easing more modestly, to 2.45%, while the OAT for the same maturity stands at 3.20%.

With rates easing, gold is stabilizing at around $2.919 an ounce, following the new highs set on Monday.

Oil prices are back up slightly, a few hours ahead of the release of US inventories. North Sea Brent climbed 0.3% to $73.2 a barrel, while WTI gained 0.3% to $69.1.

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