The Paris stock market is anticipated to undergo a quiet opening, as part of its ongoing consolidation trend. Several economic indicators are expected to have an impact throughout the day, including the release of minutes from the December meeting of the Federal Reserve.
Based on futures contracts, the Cac 40 index is projected to decrease by 0.2% at its opening. A slightly bearish session is also expected at Wall Street, following a 0.6% decline in the S&P 500 and a 1.6% drop in the Nasdaq Composite — its worst daily performance since October.
The recent 3.6% decline in Apple stock has contributed to this trend, with Barclays downgrading its recommendation due to concerns regarding the demand for the iPhone 16 and less-than-impressive sales of the iPhone 15. This affected stock prices across major technology companies in South Korea, Hong Kong, and Taiwan; TSMC and Samsung Electronics both saw approximately a 2.5% decrease.
As a result of the exceptional end to the year, the markets will face significant interest rate cuts and a smooth landing of the US economy in 2024, which are crucial considerations for investors. While the ideal scenario for central banks remains possible, it is far from guaranteed. Sovereign yields rose yesterday due to doubts about the ability of central banks to implement the extent of monetary easing anticipated by the money markets.
In relation to this, Craig Erlam, a senior analyst at OANDA, provided a comment on the situation, stating, “Everyone will naturally attempt to overinterpret the first trading session of the year, or even the week, but after an exceptionally strong end to the year, this is probably not the best idea. We have been spoiled over the last two months… The first test of 2024 is the US employment report on Friday, and it will be interesting to see how traders react if the data is once again promising.”
In addition to the employment report, traders are awaiting the release of the December ISM Manufacturing Index, the November JOLTS report, and the minutes from the last Federal Reserve meeting, which resulted in a rate freeze, coupled with a projection of three 0.25% rate cuts this year. Lauren Henderson, an economist at Stifel, Nicolaus & Co, emphasized the potential impact of the Fed’s minutes, stating, “If the committee members have a more ‘dovish’ mindset and are satisfied with the decline in inflation, this could at least strengthen the expected three rate cuts and increase expectations for even more. However, if we see comments on the still high level of inflation, this could reduce the urgency for monetary easing, and the market may lower its expectations for the number of cuts this year.”
In terms of company news, Atos announced that it will begin a due diligence phase with Airbus, as Airbus made an indicative offer for the entire BDS (Big Data & Security) scope with an enterprise value of 1.5 to 1.8 billion euros. Atos also disclosed ongoing exclusive negotiations with EP Equity Investment, the fund of Czech businessman Daniel Kretinsky, for the sale of Tech Foundaries, with no certainty of reaching an agreement.
Wolfe Research has upgraded its recommendation on Sanofi from “performance in line with the sector” to “outperformance.”
