CAC40: a strange calm before the FED and after Putin’s speech

( – After a small air pocket at the opening (-1.2% to 5,915), the Paris Stock Exchange managed to rebound and remain stable on Wednesday, pending announcements from the Reserve federal government, whose communication will be carefully scrutinized in a context of growing fears about the health of the global economy.
The CAC40 index picked up a few fractions, around 5,990 points and remained below the 6,000 point threshold.

After two days of debating the evolution of inflation and the risks surrounding growth, central bank officials are expected to decide this evening to raise rates by 75 basis points for the third consecutive time.

The decision will be made public in a press release issued at 8:00 p.m. (Paris time) and accompanied by new economic forecasts, before a press conference by Jerome Powell.

The boss of the Fed will be expected on two points: the ‘dots’ – in other words the forecasts of the central bank on the evolution of rates – and his expectations in terms of inflation.

“He should also reaffirm that future rate hikes will continue to depend on macroeconomic data,” said François Rimeu, senior strategist at La Française AM.

‘He will no doubt remind the markets that ‘history strongly warns against premature easing of policy’, adds the manager.

Yesterday, Wall Street had pressed important supports, penalized by the values ​​of the real estate after bad figures of the residential construction, in a market which in addition played the caution before the decision of the Fed.

The geopolitical aspect seems ignored by the markets while the risk of escalation of the conflict in Ukraine is becoming clearer: Vladimir Putin could send several hundred thousand additional men to Ukraine (300,000 reservists mobilized) and announces a referendum on self-determination in the Dombas (which has no chance of being recognized) while Europe intends to involve itself much more militarily in favor of kyiv (France would provide several dozen Leclerc tanks and technical assistance which could be carried out ‘on the ground’).

Tokyo lost 1.2% on Wednesday, in the red for the second day in a row, despite a weakening of the yen supposed to favor Japanese exports.

On the oil market, oil prices are recovering by +2% towards $93 in London while the latest figures for crude stocks in the United States are expected in the afternoon.

At 0.9910 against the euro, the dollar continued to rise (+0.6%) against the single currency, traders having very badly taken the shock of producer prices in Germany yesterday, which brought out a historic rate of 45.8% in August.

The bond market is going through an episode of strong tension in rates which yesterday crossed peaks of more than a decade, in Europe as in the United States.
And yields are leveling off a little this Wednesday with -3Pts on T-Bonds at 3.54% (after a new annual zenith on Tuesday) and on Bunds (-6Pts at 1.8850%) or on our OATs (-5Pts at 2.445%).

In addition to the statements of the Fed, market participants will be attentive to the figures for sales of existing homes, as well as weekly oil inventories in the United States.

On the stock news side, Schneider Electric confirms that it has made a firm offer to purchase Aveva shares. The offer price presented is 3,100 pence per share in cash. The acquisition values ​​the entire issued and to be issued share capital of Aveva at approximately £9,482 million, on a fully diluted basis, equating to an enterprise value of £10,154 million .

Casino (-3.4%) received the authorizations for the sale of GreenYellow. This transaction values ​​GreenYellow’s equity at 1.1 billion euros. The proceeds of this disposal for the Casino group, after deducting the amount reinvested, will thus amount to 600 million euros.

Vallourec (+8%) has signed a ten-year agreement with the oil company Saudi Aramco for the supply of premium casing tubes and services. This agreement includes the supply of premium casing tubes as well as inventory management services.

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