Global stocks at a high, gold near a record: the market anticipates a rapid Fed easing cycle

International financial markets are entering the weekend on a positive note, with the MSCI World Index posting strong sessions following a record high on Thursday. This momentum is fueled by a growing consensus that the Federal Reserve will begin a cycle of easing as early as this week, with at least two rate cuts expected by the end of December. Recent U.S. economic data presents a mixed picture, showing inflation around target levels but still firm in certain areas, alongside a cooling labor market. This situation supports the case for a swift easing to ensure a smooth economic landing. Consequently, bond markets are pricing in a gradual decline in long-term yields in the United States. In commodities, gold remains a key risk indicator, marking its fourth consecutive weekly increase while the dollar has remained stable during the same period. Crude oil is also gaining momentum, driven by geopolitical factors. However, weak U.S. demand is putting pressure on this market, preventing the emergence of a sustainable upward trend. Beneath the surface, flows indicate a nuanced enthusiasm: there have been net buybacks in global equity funds for the first time in five weeks, with a net outflow of $3.1 billion for the week ending September 10. This contrasts with robust inflows into bond funds (+$18.2 billion) and money market funds (+$60.8 billion) in anticipation of the Fed's actions. In Morocco, the Casablanca market consolidated on Friday, interrupting the recovery observed the previous day. The MASI index closed down 0.23% at 19,828.99 points, marking a weekly decline of 1.29%. This is the first weekly drop after eleven consecutive weeks of gains. During the week, the Casablanca Stock Exchange experienced a brief episode of volatility, reminding investors that markets do not follow a linear trajectory. On Tuesday, the MASI index fell by 2.59% in the last hour of trading due to a panic wave triggered by news of an Israeli strike in Doha, Qatar, targeting Hamas officials. This news prompted profit-taking. However, the following day saw a strong market rebound, gaining up to 2% mid-session, as if the previous day's events were merely a blip. The only downside was low trading volumes, indicating that the rebound was more a result of reduced stress than genuine buying interest. On Friday, trading volumes increased significantly, signaling a return of confidence. This series of abrupt movements is unlikely to have a lasting impact, but it carries an essential lesson: the current market is momentum-driven, where recently high-performing stocks are more likely to appreciate in the coming days and weeks. This contrasts with a value market, where investors seek overlooked stocks with solid fundamentals at attractive prices. In a momentum market, retail investors are particularly active and highly sensitive to news. Many are first-time investors attracted by summer operations, such as TGCC's capital increase and Vicenne's IPO, where 40% of subscribers were new investors. Without pause or significant correction, investors seemed to have grown accustomed to a smooth ascent, forgetting that in the stock market, trees do not grow to the sky. Continuous rises inevitably generate their own excesses. As valuations begin to stretch in certain sectors, this week's episode serves as a reminder that vigilance must be constant. Discipline remains crucial: prioritizing quality stocks with strong fundamentals is the best way to navigate inevitable market fluctuations, especially for beginners. Looking ahead, with the geopolitical "false alarm" behind us, attention is already turning to upcoming semi-annual earnings reports, which will provide insight into the actual health of listed companies. Another key event is the next Bank Al-Maghrib Council meeting, expected in two weeks. Any indication regarding the evolution of the key interest rate, in a context of easing inflation, could either fuel the markets or prompt them to hold back if the status quo persists. Asset management data shows that investors continue to favor the equity market. Equity mutual funds recorded net subscriptions of over 7.3 billion dirhams by the end of July, while diversified mutual funds, invested in both equities and bonds, reported net inflows exceeding 13 billion dirhams. Meanwhile, the weight of equities has reached historic levels in bond funds.