Powell silent on Fed rate strategy

Posted Jan 10, 2023, 4:02 PMUpdated on Jan 10, 2023 at 4:30 p.m.

The Paris Stock Exchange is moving above its lowest for the day, while Wall Street tries to jump after Jerome Powell’s speech, free of any indication on the evolution of interest rates in the United States. The trend, however, remains hampered by the “hawkish” remarks made on Monday by two officials of the American Federal Reserve.

Alice Andres, of Bloomberg, wrote shortly before Jerome Powell’s intervention that “she inflicts a dose of reality on inflation and financial conditions on the market, stocks should pull back. If he doesn’t say anything, the market could extend its advance. But the fact that it is not a monetary event suggests that the second option is more likely “.

Around 4 p.m., the Bedroom 40 lost 0.54% to 6,870.31 points in a business volume of 1.43 billion euros. In New York, the Dow Jones takes 0.24%le Nasdaq Composite 0.46%. Boeing fell 2% following a downgrade by Morgan Stanley from ‘overweight’ to ‘online weight’.

Speaking at the Symposium on Central Bank Independence organized by the Bank of Sweden, the Chairman of the Fed confined himself to general considerations, namely: Restoring price stability when inflation is high may require unpopular short-term action as we raise rates to slow the economy. The absence of political control over our decisions allows us to take these necessary measures without consideration for short-term political factors. “.

Next appointment: inflation

Investors were hoping to get some guidance on the Fed’s strategy two days before the release of December inflation figures in the United States. Markets applauded Friday’s slowing wage growth reflected in the December jobs report. But comments from San Francisco Fed President Mary Daly and her Atlanta-based counterpart Raphael Bostic took markets by surprise, with both officials judging the Federal Reserve should raise interest rates. interest above 5%, against 4.25%-4.5% currently, and keep them at this level for some time to come.

Another meeting of the day, the World Bank has revised its economic forecasts downwards. It is only targeting growth of 1.7% worldwide this year, almost half as much as in June, and warns of the risk of a global recession. In 2024, growth is expected at 2.7%.

Renault at the top of the Cac 40, EssilorLuxottica downgraded

Renault appreciated by 2.6% after its decline the day before. Goldman Sachs raised its price target on the stock from 33 to 38 euros, while maintaining its opinion at “neutral”. The car manufacturer has signed a strategic partnership with the Italian engine manufacturer Punch Torino in the field of low-emission diesel engines.

EssilorLuxottica loses 1.6%. RBC downgraded the title of the eyewear maker from “online performance” to “underperformance”.

Among other analyst ratings, Goldman Sachs lowered Valeo from “buy” to “neutral”. The action of the automotive supplier yields 1.4%.

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