The Paris Stock Exchange is moving to two-week highs, driven primarily by Beijing’s commitment to supporting its economy. Vice Premier Liu He said he would take measures to stabilize capital markets and strengthen the economy in the first quarter, Xinhua reports. The market also welcomes signs of progress in talks between Ukraine and Russia, with Russian Foreign Minister Sergey Lavrov referring to a ” hope to reach a compromise “.
An adviser to President Zelensky had previously indicated that the negotiations were difficult, while believing that there were still chances for a compromise as the exchanges become ” more realistic “. Enough to revive the attraction for risky assets pending the monetary decision of the US Federal Reserve this evening.
“Techs” and luxury relaunched
Mid-session, the Bedroom 40 rose 3.54% to 6,580.20 points in a business volume of 1.58 billion euros after a peak at 6,581.07, unprecedented since March 1. The contracts future on US indices are also up, the March expiry on the Nasdaq 100 outperforming the trend with a gain of 1.8% while Foxconn announced the partial resumption of its operations in Shenzhen, where the Apple iPhone is produced in particular.
Technological stocks are logically sought after, STMicroelectronics and Eitherc advancing by nearly 7%. Chinese support for the markets is also reviving the luxury sector: LVMH, Kering and Hermes thus resumed around 6% after falling the day before the announcement of the total containment of the city of Shenzhen. Auto stocks and go with the flow. Faurecia wins 9%, Renault 7.3% and BNP Paribas 5%.
TotalEnergies on the other hand, lost 0.5% in the wake of the fall in crude oil prices. Oil demand growth in 2022 is expected to be 35% lower than previous estimates due to the war-induced price spike in Ukraine that has lowered forecasts for global growth, says the International Oil Agency. ‘Energy in its latest monthly report.
The Fed could be a game changer
Traders are nevertheless aware that the trend could turn around in the event of another failure in the talks between Russians and Ukrainians and a more restrictive attitude than expected from the US Federal Reserve. The market is generally pricing in a quarter-point hike in the Fed funds rate, which would be the first since the end of 2018. Others should follow this year given the surge in prices.
” We expect a hawkish message by Jerome Powell, Bank of America strategists wrote in a note. ” He is expected to reaffirm that the Fed must seriously address the issue of price stability, although we believe he will stress the risks to the outlook. [économiques] related to the conflict between Russia and Ukraine and rising commodity prices “.
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.