The Paris Stock Exchange erased its losses on Tuesday, with fears over inflation and central bank action showing signs of easing. The trend is benefiting in particular from information from Bloomberg evoking new stimulus measures in China via bond issues amounting to 1.5 trillion yuan (225 billion dollars) in the second half, which would constitute an unprecedented acceleration in financing. infrastructures.
Recently weighed down by the massive confinements linked to the zero Covid policy in China, mining and steel stocks stand out, like the European Stoxx 600 of basic resources, which signs the best sector performance with a 4.5% ArcelorMittal and Eramet increased by more than 5%. Among the other values linked to raw materials, TotalEnergies earns 3% and Vallourec 6.9%. Cyclicals such as banks and autos are also sought after, such as Renault (+4.8%), Faurecia 6%, Societe Generale (+3.7%). Alstom advance for its part of 6.3%.
At 2:45 p.m., the Bedroom 40 increased by 1.66% to 6,010.51 points, after a peak at 6,018.85 (+1.80%), in a business volume of 1.3 billion euros. Elsewhere in Europe, the Dax German gains 1.80% and the FTSE Eb Milanese 2.16%. The contracts future on American indices gained between 0.3% and 0.3%.
Boris Johnson resigns, the pound rises
On the foreign exchange market, the pound sterling appreciated by 0.4% to 1.1972 dollars, supported by the confirmation of the resignation of Boris Johnson as leader of the Conservative Party. The timetable for the process of choosing his successor as leader of the party will be announced next week, he said outside 10 Downing Street. However, the appointment of a new Prime Minister should not take place before the autumn. For its part, the euro is stabilizing just below $1.02, approaching parity with the greenback after falling more than 10% since the start of the week.
The minutes of the June meeting of the ECB’s Monetary Policy Committee underline that many factors justify a 25 basis point hike in key rates in July, although several members wanted to reserve the possibility of a further tightening important. Finally, some officials have seen signs pointing in the direction of demands for salary increases.
“Contained” expectations
The “minutes” of the Fed’s monetary policy committee meeting in mid-June confirmed the US central bank’s determination to stem inflation, even at the cost of a slowdown in inflation. activity. This meeting ended with the announcement of a 75 basis point hike in the Fed funds rate, the largest since 1994.
The magnitude of the next rate hike, 50 or 75 basis points, expected at the end of the month ” will depend on the next data, and in particular the employment report for June (expected on Friday) and consumer prices for the same month (expected next Wednesday)says Paul Ashworth, chief US economist at Capital Economics.
He adds that comments from Fed officials that came after the June meeting suggested a 75 basis point rate hike was the most likely option at the end of July. But recent developments suggest that the odds of a 50 or 75 basis point tightening are 50-50. “. For his part, Jim Reid, strategist at Deutsche Bank, notes that: “ the recent weakening in data has helped equities by containing Fed expectations “.
On the bond market, the yield of the 10-year US bond tightened by 2 basis points to 2.9474%, but remained below that of the 2-year maturity, in a reversal movement of the yield curve which generally reflects fears of a sharp slowdown in economic activity.
On the commodities front, a barrel of Brent North Sea is trading just above $100 at 101.41, after falling more than 10% since the start of the week.