CAC 40: weather deteriorates in the wake of Wall Street

(CercleFinance.com) - The Paris Bourse is expected to open lower on Friday, in the wake of the previous day's negative close on Wall Street, against a backdrop of persistent uncertainty about the global economy.


At around 8:15 a.m., the 'future' contract on the CAC 40 index - expiring in March - fell 83 points to 8077 points, heralding a difficult start to the session.

The Paris market ended Thursday's session down 0.5% at 8102 points, leading it to post a limited decline of 0.2% for the week as a whole.

However, fears about global growth fuelled by trade issues are likely to dominate trading again on Friday, following last night's heavy fall in the US markets.

Despite Nvidia's rather solid results, the major New York indices posted their worst session since February 7, with the Nasdaq losing 2.8% and now down 4% since the start of the year.

Concerns about the impact of trade tensions returned, as Donald Trump confirmed that Chinese products would be subject to 10% additional tariffs from March 4.

Through its Minister of Commerce, Beijing expressed its firm opposition to the US President's decision and announced its intention to adopt countermeasures to protect the country's 'legitimate rights and interests'.

For weeks, the stock market had neglected the impact of the trade war", points out Christopher Dembik, Investment Strategy Consultant at Pictet Asset Management.

"Sooner or later, the subject had to come back to the fore", says the analyst.

Asian stock markets also felt the blow on Friday, with declines ranging by the end of the session from 2.9% in Tokyo to over 3.2% in Hong Kong.

Investors also remained cautious ahead of the release of inflation data in the United States and Europe, which promises to be crucial for the trajectory of monetary policy on both sides of the Atlantic.

In Europe, market participants will be paying close attention to the publication, at 2:00 p.m., of the first estimate of inflation in Germany for the month of February, less than a week before the monetary policy meeting of the European Central Bank (ECB).

On the other side of the Atlantic, PCE inflation, the indicator used by the Federal Reserve to monitor price dynamics, is expected to slow slightly.

The consensus is for a deceleration in price rises to 2.5% year-on-year in January, from 2.6% in December, while core inflation is expected to ease from 2.8% to 2.6%.

On the bond markets, yields remained relaxed, with German 10-year sovereign bonds trading at 2.41% and their French counterparts at 3.14%.

The yield spread between the Bund and the French OAT is stabilizing at around 72 basis points.

In the US, the 10-year Treasuries rate is holding steady in the region of 4.28%, still well below that of 3-month paper (4.34%), a reversal potentially heralding a recession in the making.

As a result of risk aversion, Forex traders took refuge in the dollar, pushing the euro below the 1.04 mark against the greenback, whereas the single currency was still trading above the 1.05 threshold on Wednesday.

On the oil markets, Brent and US light crude prices are back on the decline, penalized by doubts about global growth and the effects of escalating trade tensions.

Brent is down 0.7% at $73.5 a barrel, while US light crude (West Texas Intermediate, WTI) is down 0.8% at $69.8, the latter heading for a decline of around 1% over the week.

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