The Paris Stock Exchange is moving to almost two-week highs, driven by the sharp rebound on Wall Street, but above all by that of the Chinese markets. Investors welcome Beijing’s decision to support its financial markets recently weighed down by fears over inflation and the war in Ukraine. Vice Premier Liu He said he would take measures to stabilize capital markets and strengthen the economy in the first quarter, Xinhua reports.
At 10:30 a.m., the Bedroom 40 increased by 2.69% to 6,525.93 points in a business volume of 920 million euros after a peak at 6,535.67, unprecedented since March 3. The contracts future on US indices are also up, the March expiry on the Nasdaq 100 outperforming the trend with a gain of 1.7% while Foxconn announced the partial resumption of its operations in Shenzhen, where the Apple iPhone is produced in particular.
Enough to boost technological stocks and in particular STMicroelectronics and Soitec, which are up about 6%. Chinese support for the markets is also reviving the luxury sector: LVMH, Kering and Hermes thus resumed between 5.2% and 6% after falling the day before the announcement of the total confinement of the city of Shenzhen. Auto stocks and go with the flow. Faurecia wins 6.7%, Renault 5.5% and BNP Paribas 4.1%.
Risk of default on Russian debt?
On the geopolitical front, discussions between Ukraine and Russia are due to resume on Wednesday, with a possible ceasefire and a withdrawal of Russian troops on the program. An adviser to President Zelensky said the negotiations were tough, but said there was still a chance for a compromise as the exchanges become ” more realistic “. Separately, Russia began the process of paying bond coupons amounting to $117 million due on Wednesday. A grace period of 30 days is associated with these payments before a possible default.
The US Federal Reserve is preparing to announce its first interest rate hike since the end of 2018. The market is generally expecting a quarter-point rise in the Fed funds rate. But observers will mostly be watching the Fed’s new economic projections and expectations for upcoming rate hikes. The famous “dot plot” will be carefully examined “ taking into account that that of December 2021 has now passed “, note analysts at BNY Mellon Markets in view of inflationary and geopolitical tensions.
Powell and the Fed’s dot plot
And to recall, that on this date, the [projection] The committee’s median for the federal funds rate projected three rate hikes this year, three more next year and two in 2024. This projection is now clearly outdated. “, according to them. They see a potential for four or more more upsides on the median, but we’re also aware that the uncertainty around global events could cause a sharp divergence of views between the hawks and doves of the committee, with two ‘types’ of charts reflecting the forecasts of both groups “.
The Fed statement will be released at 7 p.m., then Jerome Powell will begin his press conference at 7:30 p.m. It is notably expected on the reduction of the balance sheet of the Fed, which reaches nearly 9,000 billion dollars. If the question should not be decided before May, analysts believe that the question of a quantitative tightening of monetary policy by the Fed clearly arises.