Cac 40 returns below 6,000 points after the Fed’s mega-boost, market news

After growing by 1.2%, the Paris Stock Exchange stopped trading for the first time since the US Federal Reserve announced a significant increase in interest rates to curb inflation. Investors are questioning the continuation of the campaign to normalize monetary policy in the United States.

At 9:15 Bedroom 40 lost 0.86% to 5979.64 points.

On Wednesday night, the Fed raised the rate of federal funds by 75 basis points, the largest increase since 1994. The gesture that markets have been expecting since last Friday’s announcement that consumer prices have accelerated by 8.6% for more than a year, a level not seen since December 1981, especially given five-year inflation expectations. collected as a result of a survey by the University of Michigan, were the highest since June 2008.

Towards the same growth in July?

Indicator Fed funds is now in the range of 1.5% to 1.75%, and the central bank plans to further increase this year, but its chairman Jerome Powell said that a deep increase will not become the norm in the next few months. However, he hinted at an increase of 50-75 basis points in July and said he was confident in the Fed’s ability to control inflation, while acknowledging that it was ” it will take time “.

The Federal Reserve expects the Fed’s rate to be 3.4% at the end of the year and 3.8% in 2023, according to the famous “chart”, a bar chart illustrating the expectations of members of the Monetary Policy Committee. Finally, the growth forecast for 2022 has been reduced from 2.8% to 1.7%, and for inflation – from 4.3% to 5.2%.

The Bank of England enters the fight

Wall Street welcomed the Fed’s commitment to fighting inflation by raising the S&P 500 by 1.5% and the Nasdaq Composite by 2.5%. Reflecting on the prospect of future monetary tightening, the yield on the 2-year US bond, which reflects inflation expectations, fell 21 basis points to 3.30% this morning and 7 basis points to 3.35% in 10 years.

The market is waiting for the noon monetary decision of the Bank of England (BoE), which should increase the repo rate by a quarter of a percentage point to 1.25%. But some economists are wondering whether the Bank of England will be tempted to raise by half a point after the mega-raise of its American counterpart. In the afternoon, three US indicators will also depend: the start of housing, weekly unemployment claims and the Philadelphia Fed’s activity index.

Rexel raises its targets

Rexel increased by 3.7%. The distributor of electrical equipment set goals for 2022 and presented forecasts for the period 2022-2025 before the day dedicated to investors, from 13:00.

Euronext increased by 2.7%. JPMorgan has raised its stock platform recommendation from “neutral” to “advanced” to € 101.

Engie loses 1.6%. The energy company said it had noticed a drop in gas supplies following new export restrictions imposed by Moscow, adding, however, that the group’s customers were not affected by the situation.

Wendel flounder 1.4%. The investment company announced the decision of the chairman of the board Andre François-Ponce to resign, adding that the name of his replacement will be announced in the second half of the year.

Dassault Systems yield 1.1%. The publisher of 3D design software has confirmed its target earnings per share of 1.20 euros by 2024 on the eve of Investor’s Day.

Saint-Gobain decreased by 1.4%. Moody’s upgraded the group from “Baa2” to “Baa1″ with a stable outlook. Rating agency especially welcomes ” high level of operating activity in 2021 and a steady momentum of the first months of 2022 from the manufacturer of building materials.