Another “yo-yo” session on the Paris Stock Exchange, caught between monetary and geopolitical considerations. A few hours before a very likely sharp rise in Fed rates, Vladimir Putin has issued new threats in line with an intensification of the war in Ukraine. Beijing has tried to calm things down by calling for dialogue between all parties.
Around 4 p.m., the Bedroom 40 recovered 0.45% to 6,006.59 points after a low point at 5,915.57 (-1.06%), in a business volume of 1.2 billion euros. In New York, the Dow Jones gains 0.65% and the Nasdaq Composite 0.42%.
The Russian president decreed this Wednesday a “ partial mobilization military reservists as part of his offensive against Ukraine by accusing the West of engaging in nuclear blackmail against his country. He thus responds to NATO, which denounced Moscow’s decision to organize a referendum in the pro-Russian republics of Donetsk and Luhansk between September 23 and 27. Elections are also scheduled in Kherson and several towns in the Zaporizhia region.
Reacting to the speech of the Russian President, the Chinese Ministry of Foreign Affairs called, through the voice of its spokesman Wang Wenbin, to ” a ceasefire through dialogue and consultation » and insisted on the need to respect « the territorial integrity of all countries “.
Safe havens sought
Be that as it may, the renewed tensions have caused a “rush” towards so-called safe-haven assets such as the American currency, which is flirting with a new 20-year peak, while the pound sterling is down 0.3% and the euro 0.6% to 0.9910 dollars. At the same time, the yield on the German 10-year bond eased 4 basis points to 1.88% after hitting an 8-year peak the day before. That of the US bond with the same maturity fell by 3 basis points to 3.54%, thus returning from a 10-year high. The yield on bonds decreases when their price increases as a result of purchases. An ounce of gold appreciated for its part by 0.6% to 1,673.58 dollars on the spot market in London.
Vladimir Putin’s chin thrusts also have the effect of boosting energy-related values. The Stoxx 600 of oil and gas signs the best sector performance in Europe with a gain of 2%, while the barrel of Brent from the North Sea is up 1.1% to 91.50 dollars. TotalEnergies thus wins 1.8%.
Spotlight on the “final” Fed Funds rate
Vallourec jumped for its part by 7.2%. The manufacturer of seamless tubes has announced the signing of a ten-year agreement with the Saudi oil company Saudi Aramco for the supply of premium casing tubes and services for its drilling activities.
The defense values also go up in the image of Thales (+5.4%) and Dassault Aviation (+4.3%).
Economists overwhelmingly expect a 75 basis point rate hike from the Fed tonight, which would be the third in a row of this magnitude and would bring the cost of money to a range of 3% to 3.25%. But the market will especially watch the new economic projections of the Fed and its estimates on the evolution of interest rates, the famous “dot plot”. Many observers believe that they should settle at least 4% at the end of the year, against 3.4% estimated in June, with no prospect of easing before 2024. Highlight of these forecasts: the final rate, ie the level from which the Fed considers that it will no longer have to tighten its policy to fight inflation.
According to CME Group calculations based on contracts future on Fed funds, the probability of a 75 basis point hike is estimated at 82%, and that of a one percentage point hike at 18%, against 17% last night and more than 30% after the publication August inflation figures.