After a decline of 2.2% last week, the Paris Stock Exchange continues its slide at the opening while the next few days will be rich in monetary decisions, with in particular those of the Fed, the Bank of England and the Bank of Japan. Activity is expected to be limited due to the closure of the London Stock Exchange for the funeral of Queen Elizabeth II.
At 9:10 a.m., the Bedroom 40 yields 0.97% to 6,018.40 points.
On Wall Street, the S&P 500 fell 4.8%, its steepest weekly loss since mid-June, weighed down by mixed data and FedEx’s decision to withdraw its annual forecast. Market participants are anticipating a 75 basis point hike in Federal Reserve rates on Wednesday night, which would be the third in a row of such magnitude.
Last week’s US economic indicators suggest that the slowdown in activity growth has not yet exerted downward pressure on core inflation [hors inflation et énergie], which should keep the Fed in the mood ‘hawkish’ during his meeting of this week, observes Andrew Hunter of Capital Economics.
The credibility of the Fed in question
A tightening of one percentage point is not excluded. According to CME Group calculations based on Fed funds futures contracts, this probability is estimated at 18%. Such a tightening is therefore not the preferred scenario insofar as it would have the effect of undermining the Fed’s credibility and reinforcing fears of a hard landing for the American economy.
But economists will mainly watch the central bank’s estimates in terms of changes in interest rates, the famous “dot plot”, while the market does not rule out a level of 4.25% in March.
On the bond market, the yield on the 2-year US bond, sensitive to expectations of changes in short rates, rose by 30 basis points last week to reach 3.92%, its highest level since 2007, before returning to around 3.86%.
TF1 and M6 throw in the towel
Lagging behind the Fed in its monetary tightening cycle, the Bank of England could opt for a rate hike of 50 to 75 basis points on Thursday and, for many economists, the United Kingdom is already in recession. The Bank of Japan, which will give its verdict on Friday, is an exception in that it has given no sign of its willingness to abandon its ultra-accommodative policy despite the fall of the yen.
On the value side, TF1 loses 2.5%, its parent company Bouygues 1% and M6 5.3%. The two television groups have announced that they are abandoning their merger project, initiated in May 2021 in order to resist the rise of online television platforms, such as Netflix or Disney+. The concessions granted by the two groups were not enough to dispel the fears of the Autorité de la concurrence.
Valneva is reserved downwards. The French group and the German IDT Biologika have reached an agreement on the end of their collaboration in the production of the inactivated virus vaccine against Covid-19 from Valneva. Given the reduction in the volume of orders from the European Commission, Valneva has suspended production of the vaccine and will, in compensation, pay IDT Biologika up to 36.2 million euros in cash and the equivalent of 4, 5 million euros in kind, that is to say in equipment.