Markets Wait And See

Indexes

In the latest weekly sequence, there was a new breakout of the Nikkei, which is up 4.3% (+5.4% the previous week). The Japanese index is returning at high speed to its high points of last March, posting a new annual gain of over 10%. The Hang Seng, meanwhile, continues to lag, with a loss of 1.45% over the last five days. The Hong Kong index has lost more than 5% since Jan. 1. As for the Shanghai Composite, it gained 3.43% this week, setting a new annual record in the process.

In Europe, the CAC 40 recorded a weekly performance of 1.16% while the Dax lost 1.37% and the FTSE 1.95%. The SMI was down 2.54%, as was Portugal, which lost 3%. Spain and Italy fared better, with declines of 2% and 1.23% respectively.

At the time of writing, the red dominates in the United States,-0.6% for the NASDAQ 100 over the week, -0.22% for the S&P 500 and -1.59% for the Dow Jones.

Macroeconomics

There has been no shortage of macroeconomic events over the past week, but their consequences have generally been quickly erased by a return to a certain wait-and-see attitude. After the turmoil created by disappointing US employment figures in August, investors were waiting for the European Central Bank this week. Christine Lagarde and her team endorsed a lower pace of asset purchases, referring to a "recalibration" rather than a "reduction" of the program. The ceiling for monthly repurchases will be reduced to €65 billion, compared to €80 billion previously. In fact, the ECB had already been buying less securities under the "PEPP" since August, so the decision did not take anyone by surprise. It is important to note that the ECB raised its growth and inflation projections, a sign that the European economy remains strong.

In the foreign exchange market, the dollar regained some ground after the job data. The Dollar Index, which measures the strength of the greenback against a basket of six currencies, is up slightly on the week. It takes USD 1.18249 to 1 EUR and 1.08522 EUR to 1 CHF. Bitcoin had a complicated week, with a drop below USD 46,000, but volatility remains high,  in the video below a video analysis. On the sovereign debt side, the US 10-year is trading at 1.32%. The Bund yield rose to -0.35%, while the French OAT yield, which had returned to positive territory at the beginning of the week, stood at -0.02% on Friday. Elsewhere in the euro zone, the Italian bond, at 0.69%, is paying less than its Greek counterpart (0.74%).

Investors will look for further indications of the inflation trajectory in the August U.S. consumer price index (Tuesday) and take the pulse of household sentiment with U.S. retail sales (Thursday).