PARIS (Reuters) – The current rotation on the equity markets could continue as the prospects for American growth are revised downwards, while new data in the United States and in the euro zone will capture the attention of observers.
Overview of market prospects in the coming days:
1/ Rotation
The correction of the American equity markets is getting worse: Goldman Sachs analysts calculate that the drop in S&P 500 displayed since mid-February is the fastest sixth correction in 75 years, triggered by a sharp drop in American growth anticipations linked to uncertainties around customs duties and pressure on technology values.
However, the fall in American actions did not have a marked impact on the rest of the world.
“Contrary to what has happened in recent years, regional diversification has worked very well, operators selling much fewer non-American actions,” says Goldman Sachs.
Thus, if the S&P 500 fell by 3.7% since the start of the year, the Stoxx 600 took 8.2%, against 4.6% for the MSCI Asia index.
The news has been favorable to Europe, Germany having voted for an investment plan of a historic scale, while Beijing announced on Sunday new measures to support its economy.
More broadly, however, “investors are starting to seek diversification outside the United States and in particular in China, with sufficiently liquid and decorated continental indices of American shares”, notes a Asia stock strategist within an investment bank.
“Admittedly, the Chinese markets would suffer from a large -scale trade war, but their decline would be less than that of the rest of the global actions,” added the specialist who recalls that the share of exporters in the Chinese equity indices is relatively low.
The fact remains that no action index is immune to the repercussions of a generalized increase in customs duties, so much is the place in the international trade of the United States, and the current rotation could slow before the next announcements of the White House on its customs policy, expected on April 2.
2/ Refuge active
Outstanding actions were not the only ones to take advantage of the change of feeling on the markets, investors rushing into risk-free assets.
Gold reached a record Thursday at 3.044.41 dollars an ounce, while the Swiss franc and the yen have strengthened by 2.9% and 5.21% respectively against the dollar since the start of the year.
Over the same period, the yield of American 10 years lost more than 36 base points at 4.21%.
If investors seek to reduce the impact of the ever -increasing uncertainty on their portfolios, the movement towards other asset classes also betrays a deep change in perception of economic perspectives.
The political and economic developments of 2025 make “glimpse an economic regime where inflation becomes a cyclical again, where economic growth becomes an assertive political objective becomes an assertive and where the nominal interest rates are balanced at higher levels”, estimates Frédéric Leroux, head of the Cross Asset team at Carmignac who hopes for a “large and progressive economic rotation and the financial markets of the United States to the rest of the world”.
3/ Data flow
PCE inflation in the United States will be published on Friday and could help degrade feeling in American markets, especially if price dynamics are more resistant than hoped by consensus.
PCE inflation increased by 2.6% over a year in January, and Bofa economists calculate that it should reach 2.7% in February.
“Inflation should not go back enough to allow the Federal Reserve to lower its rates this year, especially since the last political measures will support inflation,” justify economists.
The latest projections published Wednesday by the Federal Reserve show that the central bank also begins to anticipate a scenario of “Stagflation”, marked by higher inflation and lower growth.
4/ Change of narrative
Many advanced indicators are expected in the coming days in Europe: PMI preliminary SMI surveys will be published Monday, followed Tuesday by the IFO indicator of business climate in Germany, French consumer confidence on Wednesday and the economic climate in the euro zone on Friday.
Credit growth in the euro zone for February and French inflation for March are also expected on Thursday and Friday.
The commitment of European leaders to rearm the old continent, as well as the vote in Germany of the reform of the debt brake and a massive investment plan in infrastructure and the defense could help improve the morale of economic actors, which would feed the takeover of the activity started since the beginning of the year.
“We must make the share between these announcements and their implementation, especially if it is a question of conducting an industrial policy coordinated according to the lines recommended by the Draghi report. But the prospects for a real recovery in Europe are strengthening,” confirms Bruno Cavalier, chief economist at Oddo BHF.
The temporality of this recovery remains uncertain, however, because if European investments will take time to affect the activity, a probable increase in American customs duties will have an immediate impact on European activity.
(Written by Corentin Chappron, edited by Blandine Hénault)
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