(BFM Bourse) – With an increase of 0.75%, the Paris Stock Exchange closed at its highest since the beginning of June at 6,257.94 points, supported by the rebound in the indices on Wall Street and the very good reception reserved for the publications of the giants of the “tech” Alphabet and Microsoft. However, the market did not lose sight of the big meeting of the day with the Fed, whose decision on its rates is expected in the evening.
The Paris Stock Exchange is off to a good start, relegating its little slump the day before. The star index in Paris, which hesitated at the opening, accelerated its gains with the rebound of the American indices. The CAC 40 resumed 0.75% on Wednesday evening to close at 6,257.94 points, at a high of almost two months. The performance of the day thus reduces to 12.4% the loss since January of the Parisian index against a more marked decline of 18% at the end of the first half.
On Wall Street, a wind of optimism is also blowing on the indices: the Dow Jones took 0.50%, the S&P 500 1.4% and the Nasdaq jumped 2.45% at the close of European stock markets. Investors praised the results of the giants of “tech” Microsoft and Alphabet. The macro economy was also on board, as durable goods orders rose against all odds in June compared to May, according to Commerce Department data released on Wednesday.
The high point of this new day rich in news is obviously the decision of the American Federal Reserve on its rates. It will proceed in the evening, to a fourth increase in its key rates to try to curb the surge in prices in the United States, which peaked at more than 9% in June over one year. It is once again engaging in a balancing act with the difficult task of controlling the trajectory of prices without precipitating the country into a recession.
An increase of 75 basis points (0.75 percentage point) is now expected by investors, especially since the position of Christopher Waller, one of the governors of the Fed, and the president of the Fed of St. Louis James Bullard, two prominent members of the Fed who plead for an increase identical to that operated in June. In this context, the markets will focus on President Powell’s message and will be on the lookout for the slightest indication on the Fed’s monetary policy in the months to come, particularly on its next rate hikes.
The US Federal Reserve’s decision on Wednesday will be followed by Thursday’s release of US second-quarter GDP, with the same indicator for the euro zone expected on Friday, as are the first inflation estimates for July.
On Tuesday, the International Monetary Fund (IMF) lowered its global growth forecast to 3.2% in 2022, from 3.6% last April. The probability that the United States will escape recession is low, said the chief economist of the IMF, the institution only counting on growth of 2.3% this year across the Atlantic.
In Europe, the giant Gazprom has just reduced its gas delivery capacity to just 20% via the Nord Stream 1 gas pipeline, according to data from the German operator, increasing the risk of shortages this winter in Europe. European Union energy ministers agreed on Tuesday to a deal to jointly reduce their gas consumption and thus help Germany, which is heavily dependent on Russian blue gold. Moreover, the gas crisis that is looming in Europe and the return of political instability in Italy will plunge the euro zone into a slight recession at the end of the year and the beginning of next year, advances JP Morgan in a note published Wednesday.
Wordline and Elior on the rebound, Eurofins Scientific shunned after its results
As for values, Wednesday served as a warm-up before a deluge of results expected on Thursday.
After trading lower in early trading, LVMH closed up 1.7%. The world leader in luxury managed to generate a profit of 6.5 billion euros in the first six months of 2022, much better than in 2021. The mixed reception of this excellent publication could be explained by a weaker performance in China in the second quarter, affected by new health restrictions in the country.
The publication of Worldline caused a sensation, the specialist in electronic payments confirms its annual objectives after a sharp increase in its half-year results. The action is rewarded with a rebound of 13.8% at the close.
Michelin, on the other hand, lost 6.1%, the tire manufacturer having announced on Tuesday a net result in decline in the first half and revised downwards its annual outlook in a “tormented” environment.
Eurofins Scientific for its part dropped 7.2% despite half-year results above expectations and an increase in its annual objectives. Investors would have sanctioned the dynamics of non-Covid activities.
Excluding the star index, it is Elior who wins the prize for the strongest rise in the SRD credited with a gain of more than 30%. Driven by the lifting of restrictions linked to the health crisis and strong commercial dynamism, Elior is reporting better-than-expected activity, with in particular organic growth of 25% for the third quarter of its 2021-2022 financial year. The group confirms its objectives for this same financial year and its medium-term ambitions.
On the foreign exchange market, the euro is stable at 1.0115 dollars before the Fed’s decision on its key rates. Oil prices accelerated upwards, driven by the reduction in Russian gas deliveries and a decline in American stocks, the barrel of Brent rose by 2.5%, to 106.82 dollars while the American WTI appreciated by 2 .15% to $97.59.
Sabrina Sadgui – ©2022 BFM Bourse