(News Bulletin 247) – The Paris Stock Exchange is heading for a fourth session of decline on Thursday, in the wake of Wall Street and Asian markets in a market climate clouded by the unaccommodating tone of the Fed.

Around 8:15 a.m., the ‘future’ contract on the CAC 40 index – July delivery – lost 53.5 points to 7223.5 points, announcing the start of the session in negative territory.

Wall Street had already suffered on Wednesday, investors fearing that the will displayed by Jerome Powell, the president of the Federal Reserve, to continue monetary tightening in the United States announces an entry into recession in the more or less short term.

Concerns expressed within the institution regarding the persistence of inflation seem to have particularly deterred investors from taking risks.

At the final bell, the Dow Jones fell 0.3% and the Nasdaq Composite dropped about 1.2%.

“We have seen a rotational movement away from ‘FANMAG’ (Facebook, Apple, Netflix, Microsoft, Amazon and Google) and towards sectors labeled ‘value’ such as energy and industrials”, comments a trader .

Futures signals an open on Wall Street for now
down about 0.2%, but the trend could change with the publication, one hour before the opening, of the weekly unemployment claims figures.

The session will also be marked by the publication, in the United States, of sales of existing homes, leading indicators from the Conference Board and weekly oil inventories.

The reaction to Jerome Powell’s remarks was just as negative in Asia, where the Tokyo Stock Exchange’s Nikkei index fell 0.8% on Thursday.

In the United Kingdom, the monetary policy statement from the Bank of England (BoE) is due at lunchtime and the markets are banking on a new tightening of interest rates.

‘The country remains (…) faced with persistent inflation which continues to fuel wage increases,’ explains Bill Papadakis, strategist at Lombard Odier.

“Against this backdrop, the Bank of England has yet to complete its monetary tightening cycle, and no sign of policy easing is expected until mid-2024,” he adds.

The repercussions of Powell’s statements remain limited on the bond compartment, where the yield on 10-year Treasuries fell to 3.72% and that of the Bund of the same maturity, the euro zone’s benchmark rate, fell to 2.43% .

On the currency side, the rather ‘hawkish’ tone of the Fed boss fails to revive the dollar, with the euro rising above 1.0980 and seems to be heading straight for its annual ceiling of 1, 1050.

On the other hand, fears for the economy penalized the two contracts of
benchmark on crude, which each lost around 0.5%, to 72.2 dollars for a barrel of Brent and 76.7 dollars for American light crude oil WTI.

At this stage of the week, the CAC 40 index is heading towards a decline of around 1.7%.

Kiplink Finance chartists warn that further consolidation below the intermediate support of 7260 points would put the index in a more fragile position, even if it is still far from a trend reversal, expected around the main reversal support at 7150 dots.

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