(CercleFinance.com) – The Paris Stock Exchange begins the session without much change on Thursday morning, with investors preferring to take it easy a few hours before the highly anticipated announcements from the European Central Bank (ECB). The CAC40 index progresses by only 0.2% towards 8060 points.
The ECB will announce its decision on key rates at 2:15 p.m. before its president, Christine Lagarde, speaks at a press conference organized at the institution’s headquarters in Frankfurt.
While the European economy has been languishing for a year now, investors will be very attentive to his comments looking for the slightest hint of future rate cuts.
Strategists and economists warn, however, that we should not expect much from today’s meeting.
If the recent decline in inflation has apparently reinforced the hypothesis of a rate cut by the ECB in June, the central bank should once again reiterate 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.
‘The leader-follower pattern is the one that we have observed in several past monetary cycles, but not in all of them,’ he nevertheless tempers.
In this context of wait-and-see, the euro continues to weaken, towards 1.0740, 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 are stabilizing pending 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) thus crossed the $86 mark, despite yesterday’s announcement of a further increase in crude stocks in the United States last week.
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