The declines observed this morning are the result of the Fed’s monetary policy tightening and the health situation in China.
No news, good news. The election of Emmanuel Macron, this Sunday, April 24, had no significant impact on the financial markets of the old continent. If a general decline is observed at the opening and continues in the morning, Paris -1.98%, Frankfurt – 1.65%, Milan -1.61% and London -1.70%, the origin is to be sought on the side of the United States and China.
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European players are anticipating a rapid monetary tightening by the Fed, the American central bank. Faced with inflation, Jérôme Powell, its president, said on Thursday that an increase in key rates of half a percentage point “was on the tablefor the next monetary meeting in early May, a faster pace than expected by investors. Saxo Bank analysts note that “some major banks are even anticipating an acceleration in the pace of normalization with two rate hikes of 75 basis points each in June and July“. “This is not a far-fetched scenario given the sharp rise in inflation“, they add.
Very light “sigh of relief»
At the same time, the health situation in Shanghai continues to sow doubts. Almost all of the 25 million inhabitants of the Chinese economic capital Shanghai have been confined since the beginning of April, disrupting supply chains. And the threat of containment, after a rare epidemic outbreak, now threatens Beijing. Enough to “reinforce fears that (policy) Covid-zero will torpedo Chinese growth“, worries Jeffrey Halley, analyst of Oanda.
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As for the re-election of French President Emmanuel Macron, it “had been integrated by investors last week», Believes Jeffrey Halley, who adds that «any post-election sigh of relief will be very light“. Investors had been banking for weeks on a victory for the outgoing president and the markets had shown almost no sign of stress during the campaign. “Emmanuel Macron’s clear victory is likely to reassure the markets on the continuation of the European dynamic», points out Frédéric Leroux, member of the strategic investment committee of Carmignac.
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