(News Bulletin 247) – The Paris Stock Exchange should start slightly higher on Monday morning, as the earnings season will begin to monopolize investors’ attention over the next few days.

Around 8:15 a.m., the ‘future’ contract on the CAC 40 index – end of month delivery – advanced six points to 7529.5 points, announcing a continuation of the favorable momentum in place since mid-March.

With the arrival of the results, market participants will know this week if the rebound of the last few weeks has come to mark the beginning of a real upturn or if the recent episode of stress linked to the banking crisis has constituted a warning to be taken serious.

The CAC 40 index lined up four consecutive bull sessions during the shortened Easter week, which ended with a gain of 1.7%, which allowed it to continue its series of records by jumping on contact with the 7520 dots.

The stock market rebound was driven by the hope of an upcoming pause in the cycle of interest rate hikes by the major central banks, but also by economic indicators considered to be rather encouraging.

These factors have reinforced optimism about a possible ‘soft landing’ for growth, which would see inflation come down sharply without, however, leading to the economy entering a recession zone.

The CAC now seems to be well established in an ascending corridor and the recent rise in the market has created some buying signals, but the risk of a return to a bear market has not completely disappeared.

“After the recent turmoil, the long-term outlook for equities remains relatively favorable – although a volatile adjustment phase seems inevitable,” said Shamik Dhar, chief economist at BNY Mellon IM.

In a recent strategy note, Barclays analysts pointed out that stock markets tend to rise in the sequence from the Fed’s last rate hike to its first rate cut.

But they also warn that the effects of the latest rate hikes, as well as the recent tightening of credit conditions, make a recession increasingly likely.

This first full week of the results season should make it possible to test the resistance of stock markets, particularly on the side of Wall Street.

Several heavyweights, including Bank of America, Netflix, Tesla, J&J, Morgan Stanley and Procter & Gamble, are planning to publish their accounts in the coming days.

In Europe, participants will take note of the quarterly performance of a few heavyweights of the caliber of ASML, SAP or Nokia.

Beyond the quality of their figures, it is their forecasts that will be closely monitored by the markets.

But corporate earnings will not be the only benchmarks for investors over the coming days.

Traders should also study the latest PMI indices, due Friday, to learn more about the reality of the current ‘headwinds’ and the imminence of a possible recessionary threat.

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