(BFM Bourse) – Investors are timid on Thursday, the day after the publication of the “minutes” of the Fed having revealed, as expected, that the leaders of the institution want to significantly accelerate the rise in rates to stem inflation galloping.
Only the war in Ukraine prevented the Fed from announcing a rate hike of half a percentage point in March. This is revealed by the minutes of the last monetary policy meeting of the officials of the all-powerful monetary institution, on March 15 and 16. These “minutes” also indicate that these same leaders could start reducing the central bank’s balance sheet next month, at a rate that could approach 100 billion dollars per month. “In short, during the course of the year there will be several increases of 50 basis points (i.e. 0.50 percentage point, editor’s note) as well as a faster and more significant decline than expected in the balance sheet of the Fed “, summarizes John Plassard, analyst at Mirabaud Securities.
To control inflation, the Fed believes that it could be “appropriate” to return “quickly” to so-called “neutral” levels, i.e. around 2 or 2.50%, while its rates, which it raised by 0.25 points in March, are currently between 0.25% and 0.50%.
In reaction to these “minutes” confirming the much more restrictive bias adopted by the American central bank, investors are not really rushing to buy on the markets this Thursday morning, the CAC taking up only 0.72% to 6,545 points in a low trading volume (920 million at this stage), after having lost 3.5% over the two previous sessions.
Stormy discussions in sight at the ECB?
“The market takes note of the tightening of the Fed’s monetary policy pending the publication of the minutes of the last meeting of the Governing Council of the European Central Bank” (ECB), at the beginning of the afternoon, indicates Franklin Pichard , director of Kiplink Finance. On the side of the European institution, a member of the executive board (Fabio Panetta) warned on Wednesday that a tightening of monetary policy in the euro zone could weigh down the already weakened economic activity. The guardians of the single currency will hold their next meeting next Thursday, auguring heated discussions between proponents of a cautious approach and supporters of more determined action by the ECB, whose interest rates are still camped at their historic lows. .
While investors’ eyes are on the monetary authorities, diplomatic tensions are not diminishing at the same time, in the context of the war in Ukraine. French Foreign Minister Jean-Yves Le Drian again summoned the Russian ambassador to Paris on Thursday, after a tweet deemed “indecent” by the embassy on the abuses committed in the Ukrainian town of Boutcha. The United States announced a new round of economic and financial sanctions against Russia on Wednesday and, in Europe, European Council President Charles Michel said the EU should “sooner or later” impose sanctions on oil and Russian gases. Invited to vote, the members of the European Parliament went in this direction by deciding by 413 votes (93 votes against) for the amendment on the oil, gas and coal embargo.
In values, operators still favor defensive securities as evidenced by the progress of Eurofins (+2.8%), URW (+2.5%), Danone (+2.3%), Vinci (+2.3 %) or Carrefour (+2%). Up for the 5th consecutive session, Sanofi still grabbed 1.3% at midday and is now evolving at its historic peak in the summer of 2015, helped this Thursday by the approval of Dupixent by the European Commission for the treatment of asthma in children.
On the oil front, prices are also timidly rising again this Thursday at midday after having fallen the day before to a 3-week low after the publication of a surprise increase in crude stocks in the United States. Around 1 p.m., the barrel of Brent recovered 1.3% to 102.5 dollars. Finally, on Forex, the single currency is stabilizing against the greenback (-0.04% to 1.0895) after a sharp tumble at the start of the week.
Quentin Soubranne – ©2022 BFM Bourse