CAC 40: The hope of an inflection by the Fed propels the CAC 40 to the highest since mid-September

(BFM Bourse) – Up slightly in mid-session, the Paris Stock Exchange accelerated its gains in the afternoon. Two indicators published across the Atlantic are fueling hopes of a shift in the Federal Reserve’s monetary policy. Driven by an increase of nearly 2%, the CAC 40 closed at its highest since mid-September.

“Bad news is good news” or how the least encouraging news is applauded by investors. Two indicators published in the afternoon across the Atlantic have revived hopes that the US Federal Reserve will slow down or even pause in its monetary tightening.

While it was slightly up at midday, the Paris Stock Exchange offered a sharp jump shortly after the opening of the American markets. The CAC 40 closed sharply up 1.94% at 6,250.55 points, a few points from its high for the day (6,253.12 points).

A more accommodating Fed in the future?

The awakening of the Parisian barometer is to be credited to a monthly decline (-1.6% in August) of the real estate price index in the United States, compiling data from 20 American cities. A little later in the day, investors learned of a sharp deterioration in consumer confidence in the United States in October. US households fear high inflation and the prospect of a recession in the coming months, reports the Conference Board index.

Following these statistics “US rates fell, the dollar unscrewed and stocks rebounded”, underlines Alexandre Baradez, market analyst at IG France. The yield on the 10-year US bond thus lost 18 basis points (0.18%) at the close of European markets, while the S&P 500 took 1.4% and the Nasdaq Composite 2%.

“These numbers touch on consumer and housing, the immediate market interpretation is that they should cause the US Federal Reserve (Fed) to ease its communication after the upcoming November rate hike and send a message on rate hikes that could be more gradual,” he said. And therefore less strong than the increase in key rates in November expected by the market to 75 basis points, or 0.75%.

Friday, the wall street journal reported that after a probable increase in its key rates of 75 basis points (0.75%) in November, the members of the American central bank would consider subsequently slowing the monetary tightening of the institution with the possible end rate hikes early next year.

In Europe, operators rather expect the European Central Bank to toughen its tone on Thursday after its monetary policy meeting. A further rise in key rates is expected with a consensus advocating a rise of 75 basis points or 0.75%.

In addition to central banks, investors will have many corporate publications to decipher throughout this week. With the difficult task of separating the chaff from the wheat…

Air Liquide at full throttle, Remy Cointreau drinks the cup

In terms of values, Air Liquide seduced the market. The industrial gas specialist finished at the top of the CAC (+6.7%) driven by robust activity in the third quarter, thanks in particular to its price increases.

Another publication hailed by the market, that of Interparfums, which raised its objectives for 2022 thanks to strong demand for its products. The title ends up sharply by 11.4% on Tuesday evening.

Vivendi was caught in the dance of the rise on Tuesday (+4.6%) taking advantage of the announcement of Apple which decided to raise the prices of its music streaming service Apple Music. This brings Universal Music Group, of which Vivendi still owns 10%.

On the other hand, Rémy Cointreau lost 4.7% while the group delivered its half-yearly turnover for its entire 2022-2023 financial year ending next March. Investors are particularly concerned about a normalization of the group’s growth.

Spectacular recovery of SEB. Under pressure in the first exchanges, the title ended up 5.8% despite the lowering of the targets for 2022 of the giant of small household appliances due to “a slowdown in household consumption”.

Carmat for its part won 6.6% after announcing that it had obtained the authorizations to resume the implantations of its artificial heart.

On other markets, the euro recovered 1% to 0.9998 dollars after lackluster statistics in the United States. For its part, the pound rebounded 1.7% against 1.1468 dollars, the British currency benefited from the inauguration of the new British Prime Minister Rishi Sunak. Oil contracts are progressing a little. The contract on Brent from the North Sea for delivery in December went up 0.3% to 91.52 dollars while that of the same term on WTI listed in New York advanced 0.6% to 85.10 dollars.

Sabrina Sadgui – ©2022 BFM Bourse

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