(News Bulletin 247) – The Paris Stock Exchange should open without much change on Wednesday morning while awaiting a whole slew of economic statistics, including new inflation figures.

Around 8:15 a.m., the ‘future’ contract on the CAC 40 index – March delivery – advanced by 10.5 points to 7287.5 points, announcing a start to the session around equilibrium, or even a very slight increase.

Investors seem to want to adopt cautious positions before the publication of the many indicators likely to influence the next monetary policy decisions.

This first day of March promises to be loaded with statistics, with in particular the first estimate of the consumer price index in Germany for the month of February.

These figures will be closely monitored as the recent acceleration of inflation in countries such as the United States or France has worried the markets about the timing of monetary tightening.

Market participants will also be paying close attention to the US ISM manufacturing index, which will be published in the afternoon, as well as the manufacturing PMIs in Europe, expected during the morning.

In any case, the news from China has something to reassure the
investors, as manufacturing activity in the country signed a second consecutive month of expansion in February.

The purchasing managers’ index (PMI) for the manufacturing sector stood at 52.6 last month, down from 50.1 in January, the National Bureau of Statistics (NBS) said in a statement on Wednesday.

According to the NBS, factory output returned to normal at a faster pace than expected last month, indicating continued improvement in the economic climate.

The battery of statistics expected today should fuel the debate on the rate hikes of the Federal Reserve and the ECB, resulting in a rise in the dollar and bond yields.

In the bond market, European long-term yields are nevertheless heading back down after testing new multi-year highs yesterday.

The yield of the 10-year German Bund, a real benchmark in Europe, fell to 2.64% after a feverish surge that had taken it to 2.71% yesterday.

On the other side of the Atlantic, the yield on 10-year Treasuries eased towards 3.91%, after a peak of more than 3.97% yesterday, the latest American indicators having reinforced the prospect of a recession, and therefore of a pause in the cycle of Fed rate hikes.

“If the US economy starts to weaken, this should reduce pressure on bond yields and weaken the US dollar,” said Steven Bell, chief economist at Columbia Threadneedle.

A decline in interest rates would obviously be a buoyant factor for equity markets in the face of the uncertainties currently surrounding economic developments.

From a technical point of view, the good resistance of the CAC 40 – which still remains close to the 7300 point threshold – has the advantage of placing the index in a favorable position with a view to registering new highs.

‘A new bullish session or stabilization with a clear close above 7300 points would allow the CAC 40 index to project itself quickly on the target resistance zone between 7375 and 7400 points’, thus assure the chartists of Kiplink Finance.

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