(CercleFinance.com) – The Paris Stock Exchange should start on a positive note Thursday morning, with investors welcoming the announcements from the Federal Reserve which confirmed yesterday that it still planned three rate cuts this year.
Around 8:15 a.m., the ‘futures’ contract on the CAC 40 index – April delivery – climbed 76.5 points to 8265.5 points, suggesting the possibility of new historic highs from the opening.
The Fed did not touch its rates, as expected, on Wednesday evening but its press release suggested that the slowdown in inflation could allow it to relax its monetary policy in the coming months.
Highly anticipated, its new interest rate projections, the ‘dot plots’, continue to show three rate cuts in 2024, followed by three new reductions in the cost of money in 2025.
This slightly ‘dove’ tone reassured the market, which feared that the American central bank would reduce its plans to two rate cuts by the end of the year.
‘Ultimately, this Fed committee has a ‘dovish’ tone because the two reports on inflation that were less good than expected (January and February) did not lead the members of the FOMC to abandon the disinflation narrative and to return to the key rate cuts that were communicated in December,’ notes Bastien Drut, head of strategy and economic studies at CPR AM.
This means that the Fed remains on an accommodative bias, say traders, who now assess the probability of an interest rate cut in June at nearly 72% compared to 60% before the Fed meeting according to the CME FedWatch barometer.
In this climate of euphoria, Wall Street ended at the highest of the day and its history last night to end the day with a shower of absolute records.
With the Fed’s verdict now over, investors will have to prepare for a busy session this Thursday, with a series of economic indicators on the agenda which will be interspersed with announcements from the Bank of England (BoE).
Like its American counterpart, the BoE should also opt for a ‘status quo’ at lunchtime, but the market anticipates the start of a change in its monetary policy during the second half of the year.
The morning will be especially animated by the publication of the latest PMI activity indicators in the euro zone, with the hope that they confirm that a slight improvement is looming on the Old Continent.
‘With the fall in energy prices and the prospect of a rate cut by the ECB in June, there is reason to expect an improvement in sentiment,’ predict economists at Oddo BHF.
Among the other indicators on the menu today are unemployment benefit registrations in the United States, leading indicators from the Conference Board, sales of existing homes and the Philadelphia Fed index.
On the bond market, American government bonds continue their downward trend following the Fed’s press release.
The yield on ten-year Treasuries fell to 4.27%, while the greenback lost 0.1% of the ground against the euro, which rose to around 1.0940 after the rather conciliatory tone of the central authority .
On the value side, investors hope that the stock market debut of social media Reddit, scheduled for this afternoon, will confirm the sparkling form displayed by the technology compartment at present.
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