It is the “last of the last” of 2023 and the Paris Stock Exchange could offer a few more points

The Paris stock market is expected to rise slightly this Friday, the final session of a successful year for stock markets that have more than resisted monetary tightening by central banks. Cac 40, which has already gained more than 16% in one year, should still gain around 0.15% at the open. There is no major macroeconomic meeting scheduled and activity looks set to be all the slower with the London Stock Exchange closing its doors earlier than usual at 1.30pm.

Wall Street closed almost flat on Thursday night. Its flagship S&P 500 has not dared to break its closing record, from which it is only about 13 points away. It is up 24.6% in 2023, the Dow Jones is up 13.8%, and in the box in another category, the Nasdaq Composite has jumped 44.2%, its best annual performance since 2003.

Despite concerns about inflation and rising interest rates, a small banking crisis in March and rising geopolitical tensions, the US economy and corporate earnings remained strong. The AI ​​frenzy has fueled the technology world, dominated by the “Magnificent 7” like Nvidia. The celebratory atmosphere in recent months is also supported by the cessation of interest rate increases by central banks, which, according to the market, should turn into easing in the first or second quarter of 2024.

The arrangement of the planets in 2024 unlikely

But can the US central bank meet the high expectations of the market, which is counting on six rate cuts next year, without being twisted by the economic recession? ” In order for the markets to continue to grow, a planetary alignment is required, which is highly unlikely », Judge Vincent Mortier of Amundi, quoted by the Financial Times. If the Fed loosens policy early in the year, “ he will make a big mistake ” according to him. ” Assume that inflation is no longer a problem (…) can lead to repeating past mistakes “.

Ipek Ozkardeskaya, an analyst at Swissquote, notes that the S&P 500 tends to rise after the initial rate cut, but that the sustainability of gains depends on economic fundamentals. ” Falling US yields will support S&P 500 valuations if the economy remains strong and earnings expectations hold. That’s it for now. Earnings per share are expected to grow by more than 10% in 2024 and around 22% for the “Magnificent 7”. But it’s worth noting that these forecasts are largely factored in, so yes, there will still be a hangover and a correction period after a two-month uninterrupted rally that has fueled widespread risk-asset euphoria among investors. », emphasizes Ipek Ozkardeskaya.