After the wait, the disappointment. It is an understatement to say that investors have very coolly welcomed the words of the President of the European Central Bank (ECB), Christine Lagarde. European equity markets fell sharply during the press conference, which began at 2:30 p.m. Long questioned about inflation, the boss of the institution could not hide her concern. ” Inflation is staying high longer than we thought “, she said, adding that the “ risks are on the upside, especially in the medium term […] The Board of Governors is unanimously concerned about inflation.
It must be said that the consumer price index in the euro zone reached 5.1% year on year in January, well beyond the ECB’s target of 2% and, above all, the estimates of economists. , who expected 4.4%. For the time being, few second-round effects, ie wage increases in response to inflation, have been observed. ” Wage growth is slight “, confirmed Christine Lagarde.
Towards a rate hike in June?
On the question of an increase in key rates, nothing has been decided. ” I never make commitments without attaching conditions to them and it is even more important at this time to be very careful. We will assess the situation very carefully based on the data. We will do this work in March “, she said. Improbable, the scenario of an increase in the cost of money this year seems more and more possible in the eyes of the market. According to expectations compiled by Bloomberg, the probability of an ECB rate hike in June is estimated at 80%. That of two increases by October is evaluated at 100%.
For now, nothing changes. The ECB keeps its interest rates unchanged, the refi remaining at 0%, and confirms the end of purchases under the PEPP (emergency purchase program in the face of the pandemic) at the end of March. Purchases made under the APP (asset purchase program) will be gradually reduced from 40 billion euros per month in the second quarter to 20 billion in October.
On the stock market, the upcoming paradigm shift is going badly, even if there is nothing surprising about it. Feverish in the first part of the session, the Cac 40 suddenly stalled, losing up to 1.68%. It ends down 1.54%, at 7,005.63 points, in a fairly large transaction volume of 4.46 billion euros. the Dax 40 lost 1.57% for the same reasons, while the FTSE Eb in Milan lost 1.09%. On the bond market, the rise in yields accelerated. The Italian 10-year is at its highest since May 2020 at 1.641%, while the German Bund of the same maturity is at a peak since March 2019 at 0.155%. On the foreign exchange market, the euro amplified its rise, crossing the threshold of 1.14 dollars.
Big slap for Facebook in New York
In the United States, it is not monetary policy that worries investors, but the fall of Meta Platforms. The title of the former Facebook plunged 25.7%, the largest drop in its history. $200 billion in market cap went up in smoke. For the first time, the social network created by Mark Zuckerberg lost users in the fourth quarter of 2021. Net earnings per share came out below expectations. The group is suffering from competition from TikTok, Apple’s new privacy rules and more economic considerations. The weak growth is partly related to inflation and supply chain issues.
Among the French values, Publicis gained 0.52%. The French advertising agency achieved a very good 2012 financial year, marked by organic growth of 10% and 3% compared to 2019. The acquisition of Epsilon is proving to be judicious, its organic growth rising to 12.8%. The operating margin reached 17.5%, a sign of successful commercial conquest and cost control. On the balance sheet, the debt represents only 76 million euros, which will allow the group to reconnect with external growth operations, including large-scale ones.
End of speculation on Atos
Conversely, Dassault Systems ended down 3.77%, victim of sector rotation against “tech” stocks. In addition, the margins of the software publisher dedicated to 3D design will crumble this year due to rising recruitment costs. Among other technology stocks, Capgemini lost 3.86%, STMicroelectronics 4.06% and Worldline 4.53%.
Speculation has fallen back to Atos. The title of the digital services group dropped 7.46%, after a spokesman for the group said that the cybersecurity division is not for sale.
Among the analysts’ notes, AlphaValue/Baader raised its opinion from “cut” to “buy” on Renault (+2.48%), while Jefferies downgraded its recommendation on Kering (-2.89%) from “buy” to “hold”.