(BFM Bourse) – The Paris Stock Exchange posted its best closing performance since March 2022, driven by the rebound on Wall Street. Investors are also betting on more accommodating central banks, led by the Fed after a slowdown in manufacturing activity in the United States and less aggressive action by the Bank of Australia on its rates than expected.
The versatility of the markets is beyond doubt. On the edge of the abyss a few days ago, the world stock markets are rebounding in unison, driven by the hope of a change in the monetary policies conducted by the central banks. The CAC 40 ends up sharply by 4.24%, back on the 6000 points to 6039.69 points.
The Paris star index posted its strongest rise since March 9, 2022 (+7.13%) on Tuesday evening and thus had a third session of progress. On Monday, the Paris star index had taken up 0.55% at the end of a particularly volatile session and 1.51% on Friday. By returning to its levels of September 22, the Paris Stock Exchange thus limits its annual losses to less than 16% against even more than 20% at the end of last week.
On Wall Street, the major indices extended their rebound initiated on Monday. At the time of the close of the European markets, the Dow Jones rose 2.3%, the S&P 500 won 3% while the Nadsaq jumped 3.4% the day after copious gains above 2%.
Investors have regained their appetite for risk despite a US manufacturing indicator showing signs of slowing. This bad statistic was paradoxically a source of hope. US manufacturing growth fell to its lowest since May 2020, raising hopes of a pause in monetary tightening by the US Federal Reserve.
“U.S. data showed early signs of success in the Fed’s current tightening cycle ‘to restrain activity to fight inflation’ and may suggest that the monetary committee may not need to continue the trajectory of abrupt rise in key rates”, notes Stephen Innes, manager at Spi AM quoted by AFP.
Further easing in the bond market
For its part, the Australian Central Bank has limited its turn of the screw. It only raised its main key rate by 0.25 percentage point on Tuesday, instead of 0.50 point expected by analysts. A posture that further fuels investors’ hopes for a more accommodating Fed in the future.
On the bond front, bond yields continue to ease, like the US 10-year, which was at 3.60%, against 3.82% on Friday. Its German counterpart, the Bund of the same maturity remains below 1.90% against nearly 2.10% at the end of last week.
On the currency side, the greenback lost strength against all the major currencies, weighed down by the return of risk appetite and market expectations of a more limited rate tightening by the Fed. The euro went back to $0.99 for the first time since September 21 at $0.9940. The pound meanwhile recovered 0.63% to register its sixth consecutive session of increase, to 1.1395 dollar.
On the business side, Atos ended up 8.1%, the project to split the IT services group is progressing faster than expected, as revealed by BFM Business. The other technological stocks are not left out, OVH Cloud which rebounded by 11%, STMicroelectronics, CapGemini or Dassault Systèmes made gains of between 4.2% and 5.6% on Tuesday.
M6 plunged on its side by 10.84%. The Bertelsmann group is renouncing to sell its stake it holds in the private channel, citing too high risks and legal uncertainties to pursue the operation.
Sabrina Sadgui – ©2022 BFM Bourse