Cac 40: The Fed is in no hurry to lower its rates, the CAC 40 is faltering


(BFM Bourse) – The Parisian index ended sharply lower this Thursday, while the Federal Reserve sent a restrictive message to investors, battering the stock markets. Hermes suffered.

Tough session for the CAC 40. The flagship index of the Parisian market ended down 1.59% this Thursday at 7,213.90 points during a session led by central banks.

The market mainly absorbed the announcements from the American Federal Reserve (Fed). The central bank unsurprisingly kept its key rates unchanged. But the market was mainly monitoring the “dots plots”, that is to say the economic and rate forecasts of the members of the Fed in the medium term.

The median of those forecasts showed that Fed members expect a 25 basis point (0.25 percentage point) rate hike to take place again this year. Then they anticipate rate cuts representing 50 basis points next year.

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A more “hawkish” message than expected

“The most hawkish (restrictive, editor’s note) message came through the new rate projections: the average projections of Fed members imply a possible new rate increase this year and only 0.50% rate cuts this year. next year, compared to a projection of 2024 rate cuts of 1% last June”, underlines Alexandre Baradez of IG Markets.

“We know that the Fed’s projections are not a definitive and documented flight plan, knowing that they are revised every quarter. But the Fed’s objective was clearly not to send too flexible a message in parallel with the pause on rates, so that financial conditions do not relax (in particular via bond rates)”, he adds.

The Fed is “definitely in no hurry to lower its rates”, observe the economists at Oddo BHF.

As a result, US sovereign bond yields are rising, with that of the 10-year security rising to 4.476%, reaching its highest level since October 2007.

Almost all CAC values ​​in the red

The Bank of England also opted for the status quo on its rates this Thursday, while the central banks of Sweden and Norway increased them by 0.25%, all three meeting market expectations. This was not the case for the Swiss National Bank, whose maintenance of rates surprised investors who were counting on an increase. This precipitated the fall of the Swiss franc.

On values, only Renault (+0.4%) and Orange (+0.3%) finished in the green on the CAC 40. Hermès, which perhaps has the highest valuation multiples of the index , suffered, losing more than 5.8%. The group may have suffered from a downgrade from Oddo BHF which lowered its advice from “outperform” to “neutral”.

Excluding CAC 40, Inventiva jumped 7.2% after peaking at 25% at the start of the morning. This buyer flow should be put into perspective with the announcement of a licensing agreement with a Japanese company relating to the development and marketing of lanifibranor, its drug candidate against soda sickness, in Japan and South Korea.

On the other hand, Kalray collapsed by 18.3% after lowering its annual turnover target to 30 million euros, citing a ramp-up of the recent partnership with Dell “slower than initially expected” .

On the foreign exchange market, the euro is stable against the dollar at 1.0662 dollars. On the oil side, prices are rising a little. The barrel of Brent from the North Sea for delivery in November increased by 0.55% to 94.03 dollars, while the barrel of WTI for delivery in November also advanced by 0.8% to 90.37 dollars.

Julien Marion – ©2023 BFM Bourse


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