The week got off to a bad start on the Paris Stock Exchange. In closing, the Cac 40 lost 1.8%, ending well below the threshold of 6,400 points, at 6,378.74 points, in a trading volume of 3.1 billion euros. The movement was global within the rating, the major industrials such as banking or growth stocks being affected by these releases. Dassault Systems, Renault, Stellantis and Schneider-Electric notably lost more than 4%.
It must be said that New York is picking up again, by 1.3% for the Dow Jones, 1.6% for the S&P 500 and more than 2% for the Nasdaq Composite, after an already very red session on Friday.
Watch out for that Jackson Hole
All eyes are on Jackson Hole at the weekend, with fears that US Federal Reserve Chairman Jerome Powell will adopt a more incisive tone on monetary policy. It is from Thursday evening that the main heads of central banks, finance ministers and renowned economists on the planet will meet in this valley in the west of the State of Wyoming for the event organized by the Fed of Kansas and discuss the state of the economy and the monetary policy to be pursued. The Fed boss will intervene at 4 p.m. Paris time. Christine Lagarde will not make the trip. Isabel Schnabel will represent the European Central Bank.
” Fed Chairman Powell will likely sound much more offensive in his Jackson Hole speech at 10 a.m. Friday morning than he did in his July 27 press conference, when he said the fed funds rate had already returned to neutral writes Chris Senyek of Wolfe Research. This year, ” Jackson Hole could have a bigger impact on investors’ moods than usual, as they don’t really know where the market is going. The market does not really know where the Fed is going », Analyzed for his part this morning Ipek Ozkardeskaya, of Swissquote.
75 basis points?
July’s stock market rally was primarily triggered by anticipation that the US Federal Reserve might ease policy and start cutting interest rates if the US economy slips deeper into recession. But there is nothing, in fact or in words, to suggest that any rate cut may be looming over the next few quarters.
Quite the contrary. Members of the Fed have come and gone in recent weeks to confirm the institution’s proactive policy, saying that monetary conditions will tighten until there are tangible signs of a return to the inflation target of 2 % are noticeable.
” For the Fed, getting inflation down to target is non-negotiable. It is therefore quite possible that President Powell will declare [vendredi] that the Fed will raise rates as sharply and for as long as it takes to bring inflation down “Said Steve Englander, of Standard Chartered. We remember that at the same time, during the Jackson Hole 2021, the president of the central bank still described inflation as ” transient »…
The CME tool built from futures contracts on Fed-funds gives a 43.5% probability of a 50 basis point hike in key rates at the September FOMC meeting, in the range of 2.75% to 3%, and 56.5% of a higher rise of 75 basis points, or 3% to 3.25%. The proportion was reversed this morning.
