The Paris Bourse is set to continue its upward trend on Tuesday morning, with falling bond yields providing some support for equities ahead of the Fed's two-day meeting.

At around 8:15 a.m., the future contract on the CAC 40 index - February delivery - was up 14.5 points at 7672.5 points, heralding a green start to the session.

Buoyed by the cascade of record highs set on Wall Street, the Paris market has just racked up six out of eight sessions of gains, a favorable dynamic that has enabled it to climb 4.4% in the space of ten days, and to return to positive territory since January 1.

The prevailing sentiment on the stock market is one of optimism", explains Christopher Dembik, Investment Strategy Advisor at Pictet AM.

"Even if there are uncertainties about the future of monetary policy, which are likely to be confirmed by the Federal Reserve this week, investors consider the economy to be sufficiently solid and corporate results to be on target", the analyst points out.

Equities are resilient and inescapable", he adds.

While there is little doubt that the Fed will maintain the status quo tomorrow, investors will be watching the comments of Fed Chairman Jerome Powell for clues as to the timing of future rate cuts.

On the indicators front, Friday's release of the monthly US employment report will provide further information on the US economy.

For the time being, the focus will be on the first estimate of fourth-quarter gross domestic product in the eurozone.

According to the specialists, all indications are that economic activity remained under pressure in the last three months of 2023.

'Overall, European GDP is likely to be stagnant or down slightly. The threshold of recession will not yet be clearly crossed, but neither has the rebound begun', warn Oddo BHF's economists.

In France, GDP remained stable in the fourth quarter, according to data published this morning by Insee, having already remained unchanged in the third quarter. On average, it rose by 0.9% last year.

Investors may nevertheless show restraint ahead of tonight's results from technology giants Microsoft, Alphabet and AMD, on which they are placing high expectations.

This is an extremely important session for anyone wishing to know whether the stock market rally, which is essentially the result of confidence in tech stocks, will continue", says Christopher Dembik.

"There will be no room for error, as the results season has so far been fairly average", moderates Alexandre Baradez, head of market analysis at IG France.

Baradez points out that US equities are currently trading in an expensive environment, with the S&P 500 paying 20 times expected earnings, despite persistently high interest rates.

"Any below-expectation publication from a tech giant this week will probably lead to quick gains on US indices, to loosen valuation multiples a little", he warns.

For the time being, the lull in the bond market continues to offer support to equity markets.

Yields on US Treasuries are back on the decline, with the 10-year falling back below 4.10% ahead of the Fed's verdict. Like T-Bonds, the German ten-year is easing to around 2.23%.

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