(CercleFinance.com) – The Paris stock market weighs down 1 hour before closing: the CAC had reduced its loss from nearly -3.7% at the end of the morning to just under 2% at lunchtime … but Wall Street is gradually losing ground, after an opening close to equilibrium.
The initial plunge had been inspired by alarmist White House statements (a Russian invasion is ‘imminent’, all Americans must leave Ukraine), but the head of Russian diplomacy, Sergei Lavrov came to ease the tension by affirming that the diplomatic channel is privileged and that there is always a chance of reaching an agreement.
But a British official went one better by saying that the invasion of Ukraine would take place by Wednesday… and European markets fell -0.5%.
Despite its relapse towards 6.825, the CAC40 thus remains above the 200-MA (the breakout of which would constitute a major bearish signal).
The Euro-Stoxx50 which dropped up to -3.6% lost -2.5% again, the DAX (-2.3%) remained at more than 15,000 Pts (15,030).
On Wall Street, drops of more than 1% were expected this morning: the US indices dropped 0.5% on average. The S&P500 which reopened almost at equilibrium (around 4.412) lost 0.5%, and the Dow Jones lost -0.9%.
But the other reason for nervousness is the holding of an “extraordinary” meeting of the Federal Reserve on Monday which puts investors on the alert.
The announcement of a sharper-than-expected acceleration in inflation in the United States last week increased pressure on the Fed to tighten its monetary policy imminently.
James Bullard (FED boss of St Louis) had come out in favor of rate hikes ‘outside the FOMC schedule’ and he reiterated this solution on Monday, saying that the current levels of inflation justify raising rates up to 1 % by July (i.e. 3 rate increases in 5 months).
Markets were expecting the US central bank to announce next month its first rate hike since the start of the health crisis… but this could happen 1 month in advance (next official FOMC meeting, scheduled for March 15 and 16).
The bond markets do not seem to believe too much since the yield of the ’10 years’ US relaxes from 2.02% (Friday at 3 pm) towards 1.996%.
Our OATs and Bunds are wiping out 3Pts basis at 0.7330% and 0.2520% respectively.
The improvement on the geopolitical front also led to the consolidation of -1.5% of the ‘Brent’, which fell from $95.5 to $93.6, the ‘WTI’ fell to $92.6.
On the ‘macro’ side, investors will carefully scrutinize the figures for retail sales in the United States on Wednesday, which should not fail to fuel discussions on the consequences of inflation.
Market participants want to know if the sustained pace of inflation is affecting US household consumption, which would increase the chances that the Fed will act quickly.
After a sluggish December, however, analysts are expecting a rebound in retail sales in January, under the effect of less supply constraints in the automotive sector.
If the pace of publications is slowing down, the results season will also continue over the coming days with the results of many heavyweights on the side, with the accounts of Cisco, Walmart, Nestlé, Airbus and even Hermès.
In the news for French companies, banking stocks are suffering from heavy sell-offs (Sté Générale -6.6%, BNP-Paribas -5.2%, Crédit Agricole -4%) while rates are beginning to fall.
London Gatwick Airport, a 50.01% subsidiary of Vinci Airports, has announced the resumption of operations at the South Terminal from Sunday March 27. It had been closed for almost two years, due to the exceptional situation that affected air transport.
SES announced on Monday the creation of a joint venture with Indian digital giant Jio Platforms to distribute broadband services via satellite at “affordable” rates.
Finally, Eutelsat announces the renewal of its capacity contract signed in 2019 with Marlink, a specialist in satellite communications for the merchant navy and cruise ships.
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