CAC 40: The Paris stock market pulls back amid heavy resistance

CAC 40 pulls back in face of soaring bond yields

The CAC 40 moves sharply lower on Friday, falling 1.5% after a one-week temporization, in light of rising bond yields. US and European interest rates are reaching levels not seen in more than 10 years amid expectations of even more aggressive monetary policy tightening by central banks. The US 10-year yield is now moving to 4.3% from 3.6% at the beginning of the month and the French 10-year yield is moving to 3%, from 2.4% at the beginning of the month due to more persistent inflation than expected.

Thus, the Paris index could return to test its recent lows of around 5600 points over the next few days, but the results of GAFAM and the ECB’s monetary policy meeting will probably be decisive for operator sentiment next week.

The ECB is expected to raise interest rates again by 75 basis points next week to curb inflation and support its struggling currency against the dollar. While this rate hike is expected by markets, it should be accompanied by even more hawkish rhetoric from ECB officials, which could fuel risk aversion.

Daily Chart of CAC 40 Price – Key Levels


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