Hopes of a change in the Fed’s monetary policy took a hit, causing a sharp decline on Wall Street, as well as on Asian markets this morning. The Paris Bourse is preparing to follow suit as quarterly publications continue within the Cac 40.
The Federal Reserve, as expected, raised the Fed funds rate by 75 basis points on Wednesday evening, bringing it to a range of 3.75% to 4%. The central bank also indicated that the lag between monetary decisions and their impact on the economy could require smaller increases in the coming months. Jerome Powell then showered hopes by indicating that he was ” very premature to consider a pause, adding that given the available indicators, the peak in interest rates is likely to be higher than previously estimated. October employment figures, due tomorrow, and inflation figures next week, could shed some new light.
Smaller increases, but for longer
Clearly, the Fed is moving towards smaller rate hikes for a longer period. ” The crunch cycle is now officially a marathon, not a sprint “Summarizes Brian Daingerfield, analyst at NatWest Markets. Goldman Sachs strategists, for their part, report that Jerome Powell’s comments have reinforced their feeling that the December dot plot (a dot chart illustrating the FOMC’s interest rate estimates) will reflect a higher median projection. for the peak in Fed funds and that the FOMC will continue to raise rates beyond next February.
In New York, the S&P 500 fell 2.5% and the Nasdaq Composite 3.4% on Wednesday, while on the bond market the yield of the 2-year US bond, the most sensitive to rate expectations in the short term, soared to 4.63%. In the foreign exchange market, the dollar is strengthening against other currencies.
BNP Paribas and Stellantis better than expected
The markets have not finished with the central banks, the Bank of England preparing to announce its monetary decision at the start of the afternoon. Economists as a whole expect the repo rate to rise 75 basis points to 3%, which would be its highest level since the end of 2008.
BNP Paribas reported better-than-expected results in the third quarter, in which capital markets activities offset lower funding revenue and higher expenses.
Great confirmed its full-year outlook, after publishing better-than-expected results for the first nine months of its fiscal year and announcing two new targeted acquisitions.
Stellantis recorded a strong 29% growth in its turnover in the third quarter thanks to the increase in its deliveries and the prices of its cars, as well as favorable exchange rate effects linked to the American dollar and the Brazilian real.
Axa announced a 2% increase in its turnover over the first nine months of the year and estimated the amount of damage caused by Hurricane Ian in the United States at 0.4 billion euros.