The CAC 40 remains nervous. The Paris Stock Exchange is expected to open lower on Tuesday, September 19th (-0.5% expected by 9am), following the previous day’s drop, awaiting the beginning of the Federal Reserve (Fed) meeting and confirmation on inflation in the eurozone. On Monday, the CAC 40 fell 1.39%, finishing at 7,276.14 points, weighed down by profit-taking after a successful end to the week and by the drop in Société Générale’s stock after the presentation of its strategic plan. Investors are preparing for a new series of central bank meetings, starting with the United States (Fed) on Tuesday and Wednesday.
They expect interest rates to remain unchanged, but fear a very cautious stance on inflation, leaving open the possibility of a rate hike at the next meeting in November. “The disinflation observed since last summer is largely explained by the easing of post-Covid supply problems, which has led to an increase in supply and a slowdown in price growth. But the improvement in supply could be coming to an end, and oil prices are rising. Therefore, the Fed will certainly be cautious,” explains Ipek Ozkardeskaya, an analyst at Swissquote.
The rise in long-term interest rates weighs on the stock market. This situation has caused interest rates in the bond market to rise. In the United States, the yield on the 10-year Treasury bond reached its highest level since 2007 on Monday. In France, it is close to its highest level since 2011, at 3.25%. Rising rates could weigh on the valuation of companies in the stock market, especially in sectors like technology or luxury. In addition to the Fed, investors are also waiting for decisions from the Bank of England on Thursday and the Bank of Japan on Friday. The final estimate of inflation in the eurozone for August is expected on Tuesday.
The Bank of France is more cautious on the French economy. In France, the economy is expected to benefit from a renewed growth in 2023 (+0.9% compared to the previously anticipated 0.7%) due to dynamic exports in spring, but its progress will be hindered in 2024 and 2025 by a gloomy global economy and higher oil prices, the Bank of France said on Monday.
Among the stocks to watch, Casino announced that it has reached a preliminary agreement with a new group of creditors who were not included in the initial agreement announced in July regarding the restructuring of its colossal debt.
Furthermore, its parent company Rallye announced that it has filed an appeal against the decision of the French Financial Markets Authority (AMF), which imposed a €25 million fine on it last week.
SMCP, the textile group and parent company of brands like Sandro, Maje, Claudie Pierlot, and Fursac, announced on Monday that it is lowering its forecasts for 2023 due to “slower growth in Europe” in an inflationary environment and a slower-than-expected recovery in China.
