Another erratic session on the Paris Stock Exchange. After a gain of 0.93% at the start of the session, the Paris Stock Exchange quickly reduced its sails to return to the red. Caution is called for on the eve of the Fed’s monetary decision. Especially since the Bank of Sweden announced a 100 basis point increase in its interest rates on Tuesday, a gesture of unprecedented magnitude in nearly 30 years.
The Riksbank, which acknowledges having been surprised by stronger than expected inflation, expects a further acceleration, which suggests further rate hikes. Within the euro zone, producer prices soared 45.8% year on year in Germany last month, an unprecedented level, against 37.2% in July when the market hoped for a slowdown to 36, 8%.
Around 2:30 p.m., the Bedroom 40 lost 1.17% to 5,990.96 points in a still narrow business volume of 920 million euros. The contracts future on American indices yield between 0.5% and 0.7%. Last night, the S&P 500 and Nasdaq Composite gained 0.7% and 0.8% respectively after posting their biggest weekly declines since June last week.
Economic projections and “dot plot”
The US Federal Reserve begins a two-day meeting of its monetary policy committee on Tuesday which is expected to result in a third consecutive hike of 75 basis points in the Fed funds rate. They would thus pass within a margin of 3% to 3.25%, against 2.25% to 2.5% currently. A more severe gesture is not ruled out. According to CME Group calculations based on contracts future on Fed funds, the probability of a one percentage point tightening is estimated at 18%, compared to 19% yesterday, 31% a week ago and 0% before the publication of inflation figures for the last month in the UNITED STATES.
” The Fed has nothing to gain by surprising the markets with a stronger-than-expected hike “Summarizes Ipek Ozkardezkaya, analyst at Swissquote. Based on this assumption, it estimates that the announcement of a 75 basis point hike tomorrow would constitute ” a relief for the dollar and the equity markets, insofar as it would make it possible to unanchor the scenario of a hike of 100 basis points “.
Euronext degraded
The Fed will also unveil tomorrow evening its new economic projections, as well as its estimates concerning the evolution of interest rates, the famous dot plot. These should reach or exceed 4% at the end of the year, against 3.4% estimated in June.
On the bond market, the yield on the 10-year US bond is tending to 3.5415% after crossing the 3.5% threshold yesterday for the first time since 2011. More sensitive to changes in expectations of short-term inflation, that of the 2-year maturity is traded at 3.96%, thus approaching the 4% threshold, unheard of since 2007.
Sensitive to changes in interest rates, technology stocks are generally down. Capgemini loses 3.2%, Teleperformance 4.9%, Dassault Systems 2.4% and STMicroelectronics 1.4%.
The French Games (FDJ) rose 2.3%. The gambling operator has announced that it is in exclusive negotiations with a view to acquiring ZEturf, the second largest operator in the French online horse racing betting market.
Biggest drop in SRD, Euronext gives up 5.4%. Credit Suisse has downgraded the title of the stock exchange platform from “outperformance” to “neutral”.