(BFM Bourse) – The Parisian index fell slightly on Friday, held back by fears about the US Federal Reserve’s rates. But strong corporate publications this week carried the CAC 40.
The CAC 40 showed considerable resilience. After having taken 0.9% the day before and signed a new record in session at more than 7,387 points, the Parisian index dropped only 0.25% this Friday, at 7,347.72 points, hampered by fears over the US Federal Reserve (Fed) key rates.
But over the week as a whole, the index posted a remarkable rise of 3.06%, driven by good corporate publications.
Fed rate concerns
The Parisian index was therefore overtaken on Friday by fears surrounding the Fed’s monetary policy and the evolution of its rates.
Statements from two members of the Federal Reserve threw a chill on the market. Cleveland Fed President Loretta Mester explained that she “saw a compelling economic case for a 50 basis point hike [0,5%]”At the last monetary policy meeting two weeks ago. James Bullard, the president of the St. Louis Fed, judged that a 50 basis point rate hike in March might be appropriate given the recent economic data.
“It should be noted that neither Mester nor Bullard are voting members this year, but it is also important not to ignore this slight change in tone if it extends to current voting members” of the Fed, underlines Michael Hewson from CMC Markets.
“Suddenly the topic of conversation went from another 25 basis point hike and then two cuts later in the year a few weeks ago to a possible return to 50 basis points in March and a further increase of 75 basis points in total”, observes Craig Erlam of Oanda.
Rise in bond rates
These statements came as the producer price index in the United States for the month of January exceeded expectations, underlining that inflation remains strong across the Atlantic.
The stock markets are finally “victims of the persistent disappointment of the American economic data of Thursday”, considers Craig Erlam.
As a result, bond rates are rising. That on the 10-year debt security of the United States peaked at 3.92% before giving ground. It was moving below 3.8% before Thursday.
On the equity markets, investors continued to dissect corporate results.
Air France-KLM posted a 5.3% increase against the poor market trend, driven by excellent 2022 results, well above expectations. Conversely, GTT lost 6.2%, again despite good annual accounts. But the forecast for gross operating income (Ebitda) for 2023 somewhat disappoints market expectations.
Same logic for Eutelsat (-9%) which published half-year results below analysts’ forecasts.
Valneva for its part lost 9.1%, weighed down by disruptions in clinical trials evaluating its vaccine candidate to treat Lyme disease. Hermès for its part gained 0.3%. With a tight valuation, the saddler cannot afford the slightest deviation on his publications. But if the activity was satisfactory in the fourth quarter, the return to the shareholder, that is to say the dividend, disappoints the market.
On other markets, the euro gained 0.1% against the dollar at 1.0674 dollars. Oil prices are not immune to fears linked to the Fed. The North Sea Brent contract for April delivery fell 2.8% to 82.75 dollars a barrel while the WTI contract listed in New York for March fell 3.22% to 75.97 dollars a barrel.
Julien Marion – ©2023 BFM Bourse