(CercleFinance.com) – The Paris Stock Exchange ended the session slightly down after announcements from the European Central Bank (ECB). The CAC40 index is close to the level of 8023 points with a decline of 0.27%.
At the end of its monetary policy meeting in Frankfurt, the board of governors of the European Central Bank (ECB) decided to leave its three key interest rates unchanged, at 4.50% and 4.75% respectively. and 4.00%.
If its updated assessment of the situation ‘should further strengthen its confidence in the sustainable convergence of inflation towards the objective’, the council believes that ‘it would be appropriate to reduce the current restrictive nature of monetary policy’.
If the recent decline in inflation has apparently reinforced the hypothesis of a rate cut by the ECB in June, the central bank has once again reiterated its so-called ‘data-dependent’ approach.
Following the higher than expected inflation figures published yesterday in the United States, the growing uncertainty surrounding future rate cuts by the Fed could also influence its language.
According to the CME’s FedWatch barometer, traders now estimate the probability of a 25-point rate cut in June at only 17.9%, compared to 59.1% last week.
For many analysts, it remains unlikely that the ECB will decide to reduce its rates before the American Federal Reserve itself begins the start of its monetary easing cycle.
‘The Fed gives direction and the ECB follows. This is a very widespread opinion,’ recalls Bruno Cavalier, economist at Oddo BHF.
On the statistics side, the Department of Labor reports that producer prices in the United States increased by 0.2% in March compared to the previous month, in raw data as well as excluding food, energy and commercial services.
Over the last twelve months, the increase stood at 2.1% in raw data and at 2.8% excluding food, energy and commercial services last month, compared to respective annual rates of 1.6% and 2.7% observed in February.
In this wait-and-see context, the euro continues to weaken, towards 1.0710, but is still moving in the corridor between 1.05 and 1.11 which has characterized the parity since the start of 2023.
‘We estimate that the US dollar should gradually appreciate against the euro, over a period of three to six months, for both cyclical and structural reasons, and cross the threshold of 1.05’, underlines Mabrouk Chetouane, the director of international markets strategy at Natixis Investment Managers.
On the bond market, yields on government bonds stabilized after the ECB meeting, at 2.43% for the German ten-year bond.
On the oil side, prices have remained near peaks since the end of November, due to disruptions affecting supply and signs indicating a strengthening in demand.
The barrel of American light crude (WTI) remains close to the $85 mark, despite yesterday’s announcement of a further increase in crude stocks in the United States last week.
On values, Morgan Stanley renewed its ‘overweight’ recommendation on Stellantis on Thursday while increasing its price target on the stock from 24 to 28 euros. The analyst says he still sees potential value at current levels, as with Renault.
Oddo BHF reiterates its ‘outperformance’ opinion and its price target of 13 euros on TF1, providing an update on its expectations for the first quarter of 2024, which it believes should be dynamic from an advertising point of view.
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