In decline at the opening after the increase in line with expectations of 75 basis points in Fed rates on Wednesday evening, the strongest since 1994, the Paris Stock Exchange accentuated the movement to completely erase its rebound from the day before. The surprise 50 basis point hike in the Swiss National Bank’s main policy rate amplified fears over the price spike. Moreover, while the Bank of England for its part raised its repo rate by a quarter of a percentage point to 1.25%, as expected, this is no less than its fifth consecutive tightening since December. She further warned that she may have to act more forcefully if necessary.
Around 4 p.m., the Bedroom 40 lost 2.49% to 5,880.05 points in a business volume of 1.75 billion euros. In New York, the Dow Jonesthe S&P500 and the Nasdaq Composite show declines of between 2.3% and 3.2%, the index of 30 industrial notably falling below the threshold of 30,000 points for the first time in more than a year.
No relief before July meeting
The relief that allowed a rebound on Wall Street last night fizzled as the US Federal Reserve’s fight against inflation raised fears of a recession and, therefore, a deterioration in corporate performance. After cutting the Fed funds rate to a range of 1.5% to 1.75%, the central bank estimates that it should stand at 3.4% at the end of the year, down from 1.9% estimated in March, and at 3.8% in 2023, according to the famous “dot plot”, a dot chart illustrating the expectations of the members of the monetary policy committee. The lowering of growth and unemployment forecasts for this year, combined with the raising of the inflation estimate ” suggests the Fed is beginning to recognize that accelerating monetary policy tightening will come at the cost of slowing growth and rising unemployment notes Allison Boxer, economist at Pimco.
Strategists at NatWest Markets say they are almost certain that it ” there will be no relief ahead of the July monetary policy committee meeting which should lead to a further substantial increase in Fed rates. The Department of Labor announced last Friday an acceleration in the rise in consumer prices to 8.6% over one year, a level not seen since December 1981, especially since the five-year inflation expectations identified by the survey from the University of Michigan came out at their highest since June 2008.
On the bond market, the yield on the 2-year US bond, which reflects inflation expectations, tightened by 8 basis points to 3.27%, and that of the 7-year maturity by 14 basis at 3.42%.
Engie weighed down by the drop in gas deliveries
Engie loose 8%. The energy company said it had seen a drop in gas deliveries after the new restrictions on exports decided by Moscow, adding however that the group’s customers were not affected by the situation.
Cyclical and technological stocks show the strongest declines, such as Saint Gobain (-6.5%), ArcelorMittal (-5.2%), Renault (-5%) 4and STMicroelectronics (-4.5%).
First contributor to the decline of the Cac 40, TotalEnergies dropped 4% in the wake of crude prices (2.4% for a barrel of Brent from the North Sea).
The distribution sector is weighed down by the warning issued by the British asos on its annual accounts. The action plunged more than 27% in London. The associated Stoxx 600 dropped 3.4%.
Ipsen loses 3.4%. Morgan Stanley lowered its price target on the title of the pharmaceutical group from 90 to 80 euros, maintaining its opinion of “underperformance”.
Conversely, Euronext increased by 2.2%. JPMorgan raised its recommendation on the stock market platform from “neutral” to “outperformance” to target 101 euros.