Almost indifferent to the widely expected announcement of an unprecedented rise of 75 basis points in rates from the European Central Bank, the Paris Stock Exchange fell back during the press conference of its president Christine Lagarde. The stabilization of Wall Street after a lower opening then allowed the market to contain its losses.
Inflation forecasts raised
Around 4:30 p.m., the Bedroom 40 lost 0.16% to 6,096.44 points after a floor at 6,034.78 (-1.16%), in a business volume of 1.5 billion euros. In New York, the Dow Jones and the Nasdaq Composite oscillate around equilibrium.
In its statement of the day, the ECB indicated that it had raised its inflation forecast for the euro zone to 8.1% for 2022, against 6.8% estimated in June, from 3.5% to 5.5% for 2023. and from 2.1% to 2.3% for 2024. As for the region’s GDP growth, it is expected at 3.1% this year (2.8% in June), at 0.9% in 2023 (2.1%), and 1.9% in 2024 (2.1%).
The president of the institution warned that the economic slowdown is likely to lead to a rise in the unemployment rate and that the depreciation of the euro is also fueling inflation, which is spreading to many products and services. . The various scenarios drawn up by the ECB include that of a contraction of the economy of the euro zone next year, she added. While she stresses that wage growth remains contained, the ECB President notes however that the first signs showing that inflation expectations are exceeding the target deserve to be watched. Regarding the level from which interest rates can be considered neutral (neither favorable nor handicapping for the economy), Christine Lagarde indicated that it will take several more monetary tightenings to reach it.
Finally, in response to a journalist from wall street journal Asking if the next rate hike will also be 75 basis points, Christine Lagarde insisted that decisions will be made meeting after meeting depending on economic data, while conceding that if these suggest a sharp rise rates, ” We will do it “.
Across the Atlantic, Jerome Powell said he was ” convinced that we [la Réserve fédérale] have to act strongly against inflation “. Speaking during a monetary policy debate in Washington, the Fed Chairman said that ” we will have to continue our action until the work is finished “. The Fed’s next monetary decision will be announced on September 21 and a further 75 basis point hike in the Fed Funds rate is expected by economists.
Atos unscrews after analyst downgrade
Financials stand out, BNP Paribas, Societe Generale, Agricultural credit and Axa rising from 1.2% to 2.3%. The ECB also decided on Thursday to end its two-tier system for remunerating excess reserves because it is no longer useful since the deposit facility rate returned to positive territory this summer (0 .75% today). The ECB had adopted such a so-called “two-tier” system at the end of October 2019 to prevent banks from being too penalized by negative rates. Part of the excess liquidity of credit institutions (i.e. the excess of reserve assets over required reserves) was thus not subject to negative remuneration corresponding to the rate of the deposit.
Conversely, Atos plunged 13.4%. Goldman Sachs downgraded the value from “neutral” to “sell” and reduced its price target from 23 to 8 euros. Publicis for its part takes 1.3% as Redburn resumed coverage of the advertising group, which it deems “ poorly valued to “purchase”.