Late rebound for Cac 40, Fed managed to moderate rate hike expectations, Market News

The Paris stock exchange and Wall Street are enduring a desperate weekend, reeling from accelerating inflation in the United States, while the day’s U.S. data, including stronger-than-expected retail sales growth in June and improved consumer confidence, argued for a big Fed rate hike at the end of the month . The Fed’s rate is now in a range of 1.5% to 1.75% after a 75 basis point hike in June.

Nevertheless ” two central bank officials managed to dismiss the idea of ​​a 100 basis point hike as likely, saying a 75 basis point hike remains their preference for now says Craig Erlam, market analyst at Oanda. However, he explains his remarks by the fact that ” this will obviously depend on the economic statistics. So James Bullard and Christopher Walker can change their minds in the meantime. “.

Citi beat expectations in the second quarter

Around 4:15 p.m Bedroom 40 increased by 1.45% to 6,001.03 points with a trading volume of 1.7 billion euros. in Milan, FTSE Eb rose 1.10% the day after falling more than 3%, following the announcement of the resignation of Council President Mario Draghi, which the President of the Republic refused. in New York, Dow Jones increased by 1.73% and by Nasdaq Composite by 1.09 percent.

On the corporate front, Citigroup suffered a 27% drop in profit to $4.5 billion in the second quarter after a rise in provisions for bad debts, while its investment banking unit was hit by a slowdown in merger activity. Earnings per share, however, came in at $2.19, versus the $1.66 the market was expecting, thanks in part to its trading activity and rising interest rates. The stock rose by 9%. Wells Fargo grows from its share by 6.4%. The San Francisco-based bank has so far reported a 48% drop in second-quarter profit to $3.1 billion, in part due to a $580 million provision for loan losses. Earnings per share fell to 74 cents from $1.38 a year earlier.

China burdens with luxury

As a result of repeated restrictions, China’s GDP shrank 2.6% in the second quarter from the first, while it rose only 0.4% year-on-year. The consensus formed by Bloomberg expected -2% and +1.2%, respectively. The figures suggest Beijing will struggle to meet its target of 5.5% GDP growth this year.

Luxury goods stocks, of which the country is one of the main markets, have been losing ground, especially as the number of new Covid 19 infections has reached its highest level in two and a half months. LVMH loses 0.9% and Kering 1.7%. The sector is also affected by the slowdown in the quarterly activity of the Swiss Richemont in China, while in Britain Burberry suffered containment measures. The first fell by 4.6% in London, the second by 4.3% in Zurich.

However, the decline was offset by an increase of 3.1%. TotalEnergies. The group said it expects exceptional results in the refining and chemicals industries in the second quarter. He adds that his recycling margin has more than tripled during that period.

The greatest increase in Cac 40, Renault increased by 5.1%, while equipment manufacturers Faurecia and Valeo win 4.5% and 3.7% respectively. BofA Securities believes that fears about the auto sector are overblown. According to the author of the note, the cessation of Russian gas supplies to Europe may suspend production for several quarters, but the resumption of flows will lead to a rally during the second quarter reporting season.

Dassault Aviation increased by 3.4%. JPMorgan took cover on the Falcon and Rafale maker’s name at a “neutral” level of €162. Airbus collects 4.3% from its side.