The Paris Stock Exchange chose a week of meeting of the European Central Bank (ECB) to sign its first weekly increase since mid-August. Its flagship index, the Bedroom 40gained 0.73% over the last five sessions, thanks in particular to a jump of 1.41% on Friday, which takes it above 6,200 points, to 6,212.33 points.
In order to curb galloping inflation, and no one knows when the peak will be reached, the ECB opted on Thursday for a “jumbo” increase of 75 basis points in refinancing rates, a first since its creation in 1998. And the movement will continue: We believe the ECB will seek to bring interest rates back into neutral territory fairly quickly, following its decision [d’hier]. The hike in the policy rate means the deposit facility rate now stands at 0.75%, halfway to most estimates for the level of long-term policy neutrality (1.5%) », analyzes Konstantin VEIT, portfolio manager at Pimco. There is debate on the level of the neutral rate, some placing it more at 2%, but, basically, all observers agree on the fact that the cost of money will increase further on the Old Continent. The market is therefore warned.
On the foreign exchange market, the speech of the boss of the ECB, Christine Lagarde, did not really allow the euro to rebound. The single currency is barely at parity with the dollar, hampered by the downward revision of growth projections on the Old Continent. ” Some commentators even consider that the sudden rise in key rates by the ECB could be counterproductive for the euro, as it risks weighing too heavily on the economy and accentuating its deceleration, notes the firm Aurel BGC on Friday. In the end, it’s a loser in all cases: either the difference in key rates widens on both sides of the Atlantic, or the rise in key rates weighs on growth prospects… The European currency falls in all the scenarios. »
Banks relieved
For the banks, on the other hand, the rise in rates is good news, as it is for insurers and financial companies, which therefore realize more profits. Margins increase when the difference (or spread) between the cost of financing and the remuneration of the loans granted increases. For every 50 basis point monetary tightening, UBS anticipates a 7% improvement in profits before provisions, according to a note cited by Bloomberg. In Paris, BNP Paribas, Agricultural credit and Societe Generale closed the session sharply higher, gaining between 2.31% and 2.88%.
On the other side of the Atlantic, the cycle of monetary tightening is much more advanced. But here too, rates should continue to rise. The US Federal Reserve, “data-dependent”, will not fail to analyze the inflation figures for August, which will be published on Tuesday to determine the extent of the next tightening, expected on September 21. At this stage, the market assesses at 86% the probability of a 75 basis point rise in the rate of Fed funds in ten days, against 57% a week ago.
Among other values, the steelmaker ArcelorMittal rose 1.28% as iron ore prices held above $100 a tonne, posting their biggest weekly gain since late July. The mining group Eramet rose by 5.74%. Beyond the rise in metal prices in London, the two groups benefited from the decline in the dollar and the surprise slowdown in inflation in China last month.
Ruby shines on the stock market
Ruby, leading the SRD, won 7.42%. The oil shock, and especially the gas shock, did not prevent the company from generating a current operating income for the half-year of 244 million euros, up 30%, i.e. a level higher than the 2019 record. All geographical areas (Europe , Caribbean, Africa) have been on the rise, especially the Caribbean.
Conversely, Carmila dropped 11.46%, to 13.88 euros, coming into line with the sale price of the securities by Vendome Commerces (13.60 euros per share). For his part, the cement manufacturer Vicat fell 4.48%, after HSBC downgraded its opinion from “hold” to “reduce” and reduced its target price from 32 to 23 euros.
Finally, Atos took 5.52%. Sycomore Asset Management, a minority shareholder, wants the resignation of the group’s president, Bertrand Meunier, and the replacement of the oldest members of the board of directors by specialists in the sector, Cyril Charlot, partner, told the Reuters news agency. founder of the management company.