At the start of the week, the Paris stock market lost 0.2% around 7,280 points, as the recovery seen over the last four weeks began to run out of steam.

After rebounding by 6.5% since the end of October, will the Paris market be able to launch the famous "end-of-year rally" despite the persistence of economic risks?

From a technical point of view, this favourable momentum has above all enabled it to break through several major resistance thresholds that had been abandoned for many months.

According to Kiplink's chartists, the Parisian index can project itself above the symbolic level of 7300 points and reach, as its main target, the top of the long-term moving average at 7375 points.

The end-of-year period is usually a good opportunity for equity markets to gain ground, but with a rise of almost 13% this year, compared with an average annual gain of 4.6% over the last ten years, the Paris Bourse seems to have already beaten the call.

Against this backdrop, it would be logical to see market enthusiasm wane a little, given that the good news of the moment seems to be fully priced in.

Over the past 20 years, S&P 500 valuations have averaged 15.4x P/E, but this multiple is significantly higher today, with a P/E of 20.4x for the benchmark index for American managers.

What's more, growth is slowing more in Europe than in the US, which is why traders may be tempted to underweight Old World equities, despite their more attractive valuations.

Investors will be keeping a close eye on the indicators scheduled for this week, to see whether or not they confirm the scenario of the end of the rate hike cycle that has so far been driving the trend.

Eurozone inflation - due for release on Thursday - is expected to decline further compared with the previous month: the consensus is for a decline to 4% on a core basis, compared with 4.2% in October.

US statistics will also be closely scrutinized, as they will, among other things, testify to the state of consumer spending, which remains the main driver of growth on the other side of the Atlantic.

Household spending in the USA, also due on Thursday, will provide an insight into the consumer's propensity to spend as the year draws to a close, after retail sales fell in October.

This publication will be accompanied by the PCE 'core' index for
October, which remains the preferred measure of inflation as defined by the US Federal Reserve.

More generally, a new estimate of US growth - expected tomorrow - followed by the ISM manufacturing index on Friday, will provide an indication of the economy's continued resilience.

In news from French companies, Valneva announces that the European Medicines Agency (EMA) has accepted its application for marketing authorization (MA) for its single-dose chikungunya vaccine candidate VLA1553.

Veolia announces that it has signed an agreement for the acquisition by NGE, an independent public works group, of SADE-CGTH, its subsidiary specializing in the construction and rehabilitation of water and infrastructure networks, for an enterprise value of 260 million euros.

Finally, Lhyfe announced on Monday that it had been selected by Nantes and the Port of Saint-Nazaire to develop a green hydrogen production site designed to decarbonize the port ecosystem on a "large-scale" basis.

Copyright (c) 2023 CercleFinance.com. All rights reserved.