(BFM Bourse) – The Parisian index ended higher this Friday, the market not seizing up following the statements of the president of the American Federal Reserve. Over the week, the CAC 40 gained 0.7%.
Jerome Powell did not play spoilsport this Friday. The CAC 40 ended up 0.48% at 7,346.51 points. Over the week, the Parisian index gained 0.73%, continuing the good trend of recent weeks.
The market accepted the speech of the president of the American Federal Reserve (Fed) without any problem. Jerome Powell said it was premature to “conclude with certainty that we have reached a sufficiently restrictive level, or to speculate on when policy might be eased.” “We are prepared to further tighten the policy if it proves appropriate to do so,” he added during a speech at Spelman College in Atlanta, according to comments reported by AFP.
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This does not prevent the market from starting to anticipate cuts in key rates, in light of the latest encouraging figures on inflation, which were notably published on Thursday in the euro zone (consumer price index) and in the United States. (PCE index, the Fed’s favorite).
According to data from the CME Group’s FedWatch tool, the market is pricing in a 50% probability of a cut in the Fed’s key rates as early as next March. And by December 2024, investors estimate a 97% probability that the Fed’s rates will have been cut by 75 basis points (0.75%).
“Investors are increasingly adhering to the idea of a rate cut from the second quarter of 2024,” notes Craig Erlam of Oanda. “But this will depend on data which continues to indicate a decline in inflation and a cooling of activity on other indicators,” he adds.
On the equity side, Société Générale fell 0.8%, penalized by a lowering of recommendations from Goldman Sachs to “sell”. Along the same lines, LVMH lost 0.5% while Morgan Stanley went from “overweight” to “online weighting” on the stock.
Conversely, Worldline advanced 5.9%, benefiting from information from Bloomberg that Crédit Agricole SA would seek to take a stake to support the payments group which constitutes its commercial partner. Contacted by the agency, the two companies did not comment.
On other markets, the euro lost 0.2% against the dollar. Oil contracts are sluggish after falling the day before following the announcement of OPEC+ production cuts. The February contract for North Sea Brent and the January contract for WTI listed in New York are both almost stable.
The announcements of production cuts from OPEC+ “lack credibility because they were announced after difficult negotiations and concern voluntary cuts by each country rather than a global agreement”, explains Xavier Chapard of LBPAM.
Julien Marion – ©2023 BFM Bourse