The Paris Stock Exchange is up sharply on Tuesday, the Cac 40 climbing by 1.8% in the middle of the day, to 6,379.48 points, in a trading volume for all that low of less than 700 million euros. The movement is led by the large capitalizations of the place and in particular by the luxury sector. LVMH, Hermes International and Kering are gaining 3 to 4%, carried by rumors, unconfirmed and relayed by the Bloomberg agency, on social networks according to which the Chinese authorities are considering gradually ending their zero Covid policy. The CSI 300 index gained 3.6% this morning. Chinese Foreign Ministry spokesman Zhao Lijian, however, reacted by stating that he was “not not up to date » of a government committee responsible for evaluating the means of such an end to the health restrictions still in force in the country.
” I’m not surprised by this rumor circulating online about a conditional reopeningsaid Liu Xiaodong, fund manager at Shanghai Power Asset Management. The Council of State could wait for the deliberation of the team of experts to determine the next step to be taken. The market is also ready to buy on any indication that an inflection point is in sight for zero Covid policy. “.
A few “dovish” words?
Published this morning, the PMI manufacturing index as presented by Caixin also came out a little above expectations, at 49.2 points in October, against 48.1 in September. Commodity-related stocks, which would benefit from a recovery in the Chinese economy, are also circled. TotalEnergies advance of 2.1%, in the wake of the rise of 2 dollars in oil, the barrel of Brent returning to 94 dollars. oil services CGG and Vallourec take around 4%, while mining Eramet takes 5%. ArcelorMittal earns almost 2%.
The tension nevertheless remains perceptible, less than 48 hours before the conclusions of the Fed’s monetary policy meeting. If there is no doubt that the central bank will raise its key rates by 75 basis points, for the fourth time in a row, the intervention of Jerome Powell, its president, will be much more watched. Will he have these few “dovish” words that will be applauded by the Stock Exchange? Nothing is less sure. For Ipek Ozkardeskaya, of Swissquote, Jay could very well, again, give a slap to the “doves” after the figures of the PCE price index, the measure of inflation preferred by the Fed, presented at the very end of last week.
Everything the Fed wants to avoid
At 6.2% over one year, it certainly remained stable in September compared to August, which could bode well for a stabilization in the rise in prices, but in “core” data, i.e. excluding volatile elements such as energy and food, it continued to increase. At 5.1%, it remains more than twice the central bank’s 2% target. While some members of the Fed have expressed in recent weeks the possibility of slowing the pace of monetary tightening, there is a good chance that Jerome Powell will slash “dovish” hopes this week, as he did earlier. this year, concludes Ipek Ozkardeskaya. A less offensive speech would not fail to relaunch the stock market machine, as inflationist… everything the Fed wants to avoid.
” We are quite confident that the Fed will raise its key rates by 75 basis points, as expected.also summarizes Jason Ray, of Zenith Wealth Partners, interviewed by CNBC. But looking ahead, we will be watching very closely whether the central bank will start to change its language on inflation or on the pace of upcoming rate hikes. »
No surprises in Australia
This morning, the Bank of Australia was not surprised. It raised, as expected, its main interest rate by 25 basis points, to 2.85%, while signaling that other increases will be necessary, in a country where inflation stands at 6.1 % over one year, with an expected peak of 8% according to the monetary authorities.
Nothing very important to report this Tuesday, especially in France since the day is a public holiday. We simply expect at 2:45 p.m. the PMI index of purchasing managers for October in the manufacturing sector in the United States, before its ISM equivalent at 3 p.m., more closely followed by the markets, and construction spending in September.