Market: Heading for a fourth downturn

( – The Paris stock market headed for a fourth session of decline on Thursday as Wall Street and Asian markets trailed in a market climate clouded by the dovish tone from the Fed.

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

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

Concerns expressed within the institution regarding persistent inflation appear to have deterred investors from taking risks.

At the final bell, the Dow Jones was down 0.3% and the Nasdaq Composite was down about 1.2%.

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

Futures are signaling an opening on Wall Street for now
down about 0.2%, but the trend could change with the release an hour before the opening of the weekly jobless claims figures.

The session will also be marked by the publication in the US of existing home sales, leading indicators from the Conference Board and weekly oil figures.

Reaction to Jerome Powell’s remarks was equally negative in Asia, with Tokyo’s Nikkei index down 0.8% on Thursday.

In Great Britain, the monetary policy statement from the Bank of England (BoE) is issued at lunchtime, and the markets are betting on a further 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 background, the Bank of England has not yet completed its monetary policy tightening cycle and no signs of policy easing are expected until mid-2024,” he adds.

The fallout from Powell’s comments remains limited on the bond front, with the yield on 10-year Treasuries falling to 3.72% and the Bund yield of the same maturity, the eurozone’s benchmark rate, falling to 2.43%.

On the currency side, the rather ‘hawkish’ tone from the Fed chief fails to revive the dollar, with the euro rising above 1.0980 and looking headed straight for its annual ceiling of 1.1050.

On the other hand, fears about the economy punished the two contracts
benchmark crude, which each lost about 0.5%, to $72.2 a barrel Brent and $76.7 for US light crude WTI.

At this point in the week, the CAC 40 index is headed for a decline of about 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, although it is still far from a trend reversal expected around the main reversal support of 7150 points.

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