The Paris Bourse is stepping up its losses on the 3rd Monday of the year, with the CAC40 (-0.85%) - which lost 0.6% of last week's gains - threatening the annual low of 7,400/7,390 reached on January 11.

The day's few sales weighed more heavily in a context of particularly tight trading in the absence of US operators, as Wall Street was closed for the Martin Luther King's Day celebrations on January 15.
The European markets (-0.6% on average) failed to benefit from the +0.9% rise in the Tokyo Stock Exchange, which has gained 7% in a straight line since January 4 (6 consecutive sessions of gains), with the Nikkei climbing back above 36,000 during the session, driven by investors' expectations that the Japanese economy will emerge from deflation.

A wait-and-see attitude also prevails, as the flow of quarterly earnings is set to intensify on Wall Street this week, monopolizing investor attention in the absence of any major economic events.

Fourth-quarter earnings releases are generating particular anticipation due to the high valuation of the S&P 500, which trades at 19.5 times expected earnings, compared with a ten-year average of 17.6 (and the 'Fantastic 7' have P/Es ranging from 29 to 80 times earnings).

In the US, Morgan Stanley and Goldman Sachs will publish their accounts on Tuesday, followed the next day by Alcoa and then by oil services group SLB on Friday.

Note that the US election primaries have begun with the IOWA caucus (Trump a clear favorite in this ultra-conservative state).
Barring any last-minute surprises, all the polls indicate that Trump is in a position to win the Republican nomination", stresses Christopher Dembik, investment strategy advisor at Pictet AM.

The economic agenda promises to be calmer, with the highlight being the retail sales figures for December, which will enable us to gauge the health of consumption in the USA.

The 'figure of the day' was published mid-morning: in October and November 2023, seasonally-adjusted industrial production fell by 0.3% in the eurozone and by 0.2% in the EU, according to Eurostat, following declines of 0.7% and 0.5% respectively between September and October.

In the eurozone, production of durable consumer goods fell by 2%, while production of non-durable consumer goods rose by 1.2%.

Uncertainty surrounding the timing of the Fed's first rate cut could also continue to generate volatility, while the latest inflation data argue in favor of a delay.

In the USA, on the other hand, markets are currently banking on a 70% chance of a first easing in March, followed by two further reductions in the cost of money in May and June, expectations deemed too aggressive by some analysts.

Only the Federal Reserve's next meeting, scheduled for the end of the month, will provide some visibility on the future course of monetary policy.
OATs and Bunds are down this Monday by +5 and +6pts, and BTPs by +6.5pts, while the ECB seems very reluctant to let markets expect a rate cut before next autumn (whereas many are hoping for one at the start of the 2nd half of the year).


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