The Paris Stock Exchange erased its losses on Tuesday (-2.7%), fears of “super-raising” central bank rates to curb inflation giving, for the moment, signs of appeasement. The trend is further benefiting from reports from Bloomberg of new stimulus measures in China via bond issues amounting to 1.5 trillion yuan (225 billion dollars) in the second half, which would constitute an unprecedented acceleration in the infrastructure financing.
Recently weighed down by the massive confinements linked to the zero Covid policy in China, mining and steel stocks stand out, like the Stoxx 600 of basic resources, which signs the best sector performance in Europe with a gain of 5.7. % ArcelorMittal increased by 6.6% and Eramet by 7.2%. Among the other values linked to raw materials, TotalEnergies garners 4.1% and Vallourec 8.3%. Other cyclicals such as banks and automobiles are also sought after, such as Societe Generale (+4%), Renault (+6.4%) and Faurecia (+8.4%). Alstom advance for its part of 7.2%.
Shortly after 4 p.m. Bedroom 40 increased by 1.59% to 6,006.29 points, after a peak at 6,024.31 (+1.89%), in a business volume of 1.65 billion euros. Elsewhere in Europe, the Dax German gains 1.92% and the FTSE Eb Milanese 2.81%. In New York, the Dow Jones and the Nasdaq Composite gain 0.67% and 1.17% respectively. Chip manufacturers AMD, Nvidia and Intel appreciated by 3%, encouraged by the growth of 21%, and above expectations, of sales of Samsung in the second quarter. In Paris, STMicroelectronics garners 2.4%.
Boris Johnson resigns, the pound rises
On the foreign exchange market, the pound sterling appreciated by 0.7% to 1.12001 dollar, supported by the confirmation of the resignation of Boris Johnson as leader of the Conservative Party. The timetable for the process of choosing his successor as leader of the party will be announced next week, he said outside 10 Downing Street. However, the appointment of a new Prime Minister should not take place before the autumn. For its part, the euro is stabilizing just below $1.02, approaching parity with the greenback after a drop of more than 10% since the start of the week which has brought it back to its lowest point. since 2002.
Published at the beginning of the afternoon, the minutes of the meeting of the monetary policy committee of the ECB in June emphasize that many factors justify a 25 basis point hike in key rates in July, although several members wanted reserve the possibility of further tightening. Finally, some officials have seen signs of an increase in demands for salary increases.
“Contained” expectations
The “minutes” of the meeting of the Fed’s monetary policy committee in mid-June confirmed last night the determination of the American central bank to stem inflation, even at the cost of a slowdown in the activity. This meeting ended with the announcement of a 75 basis point hike in the Fed funds rate, the largest since 1994.
The magnitude of the next rate hike, 50 or 75 basis points, expected at the end of the month ” will depend on the next data, and in particular the employment report for June (expected on Friday) and consumer prices for the same month (expected next Wednesday)says Paul Ashworth, chief US economist at Capital Economics.
He adds that comments from Fed officials that came after the June meeting suggested a 75 basis point rate hike was the most likely option at the end of July. But recent developments suggest that the odds of a 50 or 75 basis point tightening are 50-50. “. For his part, Jim Reid, strategist at Deutsche Bank, notes that: “ the recent weakening in data has helped equities by containing Fed expectations “.
On the bond market, the yield of the 10-year US bond tightened by 3 basis points to 2.9538%, but remained below that of the 2-year maturity, in a reversal movement of the yield curve which generally reflects fears of a sharp slowdown in economic activity.