(BFM Bourse) – Unprecedented since 1982, but well anticipated by the market consensus, the peak of inflation in the United States in December did not take investors by surprise. Reassured by the speech of the boss of the Fed and encouraged by initial results that exceeded expectations, the Paris market confirmed its rebound by gaining 0.75% on Wednesday.
Once again, the head of the Federal Reserve (as part of his hearing by the US Senate for the confirmation of his second term) has brilliantly accomplished his balancing act. Confirming on the one hand the trajectory of a reduction in the balance sheet of the institution, assuring on the other that the Fed was fully mobilized on the fight against inflation – while affirming that it would indeed pass its peak in the during the year, “Jay” Powell struck the right note in the eyes of the markets. Already rewarded with a gain of 0.95% on Tuesday, the CAC 40 stayed the course on Wednesday, crossing the threshold of 7,200 points with a further increase of 0.75% to 7,237.19 points in an appreciable volume of 4 billion. euros.
If he did not bring any new element on the merits, it is ultimately what Jerome Powell did not say that carried the markets: in this case, he took care on Tuesday not to bring water at the mill of the institution’s “hawks” (some of whom have recently called for up to four rate hikes in 2022). By anticipating a peak, and therefore a possible beginning of a decline, in inflation, it implicitly suggests that the imperative to raise rates is not that pressing. The announcement this Wednesday that the inflation rate across the Atlantic had accelerated further at the end of 2021, from 6.8% in November to 7% in December (the consumer price index had never climbed so much on a year since June 1982) has not even succeeded in dampening the mood – it is true that the consensus, for two months, is no longer surprised on the rise, economists having on the whole correctly anticipated the last two publications of the CPI.
Across the Atlantic, the main indices maintained a bullish orientation, but without excessive enthusiasm (+0.25% for the S&P 500, +0.26% for the Nasdaq, but only +0.08% for the Dow) after confirmation of this 7% increase in prices last month.
Featured Rexel and OVHcloud
At the forefront of the battalion of results publications, a few stocks particularly stood out on the Paris market on Wednesday, such as Rexel, which jumped 10.3% after signaling that its 2021 performance would exceed the targets, however revised to the increase during the year.
OVHCloud gained 4.6% on the announcement of double-digit growth, beyond expectations, in its revenues in the first quarter of its 2021-2022 financial year.
The continued rise in oil prices (to 83.37 dollars per barrel of Brent, close to a two-month high) supported the price of TotalEnergies (+3%), the second largest increase in the flagship index after ArcelorMittal (+6.5%). Schneider Electric left 2.7%, returning to 95 billion euros of capitalization, very far from the symbolic bar of 100 billion that the electrician briefly reached last week. The banking and automotive sectors – excluding Renault – were still in demand, while luxury lagged a little (particularly LVMH and Hermès, which did not fail to constrain the change in the CAC given their weight in index).
Among the notable declines, Renault therefore faltered by 3.6% in fear of collective action at the initiative of lawyer Christophe Lèguevaques, for failures of gasoline engines. Nexity fell 4.5%, under the influence of a downgrade (to neutral) from the board of OddoBHF, which points to a possible slowdown in growth this year.
On the foreign exchange market, the dollar lost its luster after comments deemed moderate by Jerome Powell, allowing the euro to record a peak since mid-November 2021 at 1.1430 dollar (+ 0.53%) of 0 .1% to 1.1360 dollars at the end of the day, while Bitcoin accentuated its rebound to more than 43,500 dollars, 2% better than the day before.
Guillaume Bayre – ©2022 BFM Bourse