The Paris Bourse is expected to be little changed on Monday morning, as the imminent meetings of the US Federal Reserve and then the European Central Bank (ECB) keep investors on their toes.

At around 8.15am, the 'future' contract on the December-delivered CAC 40 index climbed 7.5 points to 7539.5, pointing to a continuation of last week's favorable trend (+2.5%).

The major central banks recently ended their rate hike cycle, but their more accommodative approach does not seem sufficient in the eyes of the markets, which are now calling for rate cuts.

A wait-and-see attitude is likely to prevail at least until Wednesday evening, when the Fed's monetary policy statement will open the week's monetary ball.

Friday's publication of better-than-expected employment figures for November confirmed the scenario of a "soft landing" for the US economy, relieving some of the pressure on its shoulders.

The probability of a Fed rate cut in March is now estimated at only around 40%, according to CME Group's FedWatch barometer, while this barometer puts the scenario of a March rate hold at over 57%.

The situation is very different in Europe, where the European Central Bank (ECB) is being urged to do more in the face of an economy that is undeniably flirting with recession.

"The markets consider that the first rate cuts could come as early as March, and that the ECB could make up to six 0.25% rate cuts in 2024", notes Alexandre Baradez, Head of Market Analysis at IG France.

For the strategist, these expectations are probably too aggressive, given that core inflation in the eurozone is currently hovering around 3.6%, still a long way from the central bank's 2% target.

Nor does the Bank of England, whose announcements are expected on Thursday as is the case for the ECB, seem in any great hurry to join the 'dove' camp.

With central banks showing no signs of falling into line with current market forecasts, the return to reality could prove complicated for investors already in euphoric mode.

Hopes of a lower cost of credit have greatly boosted appetite for equities this autumn, and last Friday saw the CAC 40 return to within 30 points of its all-time high.

On Wall Street, New York's main indices have just racked up six consecutive weeks of gains. With a gain of 12% since the end of October, the S&P 500 is now trading at annual peaks.

In addition to central bank announcements, the autumn rally will be tested by key economic indicators, including the latest inflation and retail sales figures in the US.

In Europe, the preliminary PMI indices for December - expected on Friday - will help assess the seriousness of the recessionary threat on the Old Continent.

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