Previous market signs hinted at the initial growth of Cac 40 … But the decline was imposed from the beginning, becoming more pronounced as the session progressed. The day ended unsuccessfully with a sharp fall in Paris, as in all stock markets. The reason? “Good” tone of the US Federal Reserve, which said it would be necessary ” time control inflation and interest rates Fed funds will continue to grow, even if this strategy slows growth. On Wednesday night, the monetary institution, as expected, raised key rates by 75 basis points, bringing them to a range of 1.50% to 1.75%, the largest increase since 1994. intrusion [de l’Ukraine par la Russie, ndrl] and related events put additional pressure on rising prices and affect global economic activityexplains the Fed in its press release. The closure of Covid in China will increase tensions in supply chains. Against this background, Fed Chairman Jerome Powell said that the increase by 50-75 basis points will be considered at the next meeting in July. In general, members of the Monetary Policy Committee have significantly raised their forecasts for key rates by pointing to the rate. Fed funds 3.4% at the end of the year and about 3.8% at the end of 2023.
The screws rotate sequentially
Will these repeated reinforcements affect economic growth? The risk is high. And the Fed agrees to accept it. The institution also lowered its growth forecast for 2022 from 2.8% to 1.7%, raising its inflation forecast from 4.3% to 5.2%. Unemployment is also expected to rise to 4.1% in 2024. ” This forecast does not yet reflect a recession, but the sudden application of the Fed’s monetary brakes will be difficult for the economysays Christian Sherrmann, American economist at DWS.
The Fed is not the only one who is more aggressive. On Thursday morning, the Swiss National Bank announced an unexpected increase in the key interest rate by 50 basis points to -0.25%, for the first time since 2007, and indicated that others may be needed after that. The Bank of England, which made its copy at 1 p.m., raised its base rate by 25 basis points to 1.25%. It remains to be seen what the Bank of Japan will do. It will be in action on Friday.
In the stock market, investors are very wary of these statements. In Paris, Bedroom 40 suffered its seventh session in eight days, falling 2.39% to 5,886.24 points with a trading volume of 3.6 billion euros. In Frankfurt, Art Dax fell by 3.1%. FTSE Eb 3% in Milan. across the Atlantic, c Dow Jones, S & P500 and Nasdaq Composite profitability from 2.1% to 3.5%, the index of 30 industrial even fell below the symbolic threshold of 30,000 points for the first time in a year.
In the bond market, interest rates rose before reversing. Thus, the yield of 10-year IGLBs reached a maximum of 3.491%, rising to 3.3912 2-year. In Europe, the yield on Italian 10-year bonds rose from 4% and then returned to 3.75% at the end of the European session. The spread with the German bank of the same maturity is 2.1%.
water in the gas
In terms of values, cyclicality and technology have experienced the biggest drop in Cac 40, for example Saint-Gobain (-6.53%), ArcelorMittal (-5.45%) and STMicroelectronics (-6.19%).
In addition to the flagship index, Engie melted by 7.29%. Energy noted a drop in gas supplies following new export restrictions imposed by Moscow, adding, however, that the group’s consumers were not affected.
Ipsen lost 3.68%. Morgan Stanley lowered the target price for the title of pharmaceutical group from 90 to 80 euros, while maintaining its view of “failure”.
And vice versa, Euronext rose 1.54% after JPMorgan raised its trading platform recommendation from “neutral” to “advanced” to 101 euros.