The Paris Stock Exchange accentuates its losses as US index futures point to a lower opening in New York. The optimism at the beginning of the week was cut short after the acceleration of inflation to 7% over one year in December in the United States, an unprecedented rate in nearly forty years. A development highlighted by some officials of the US Federal Reserve to consider several rate hikes this year.
Retail sales fell 1.9% across the Atlantic last month as the consensus expected a decline to 0.1% after rising 0.3% in November. The market also scrutinizes the results of major US banks for the fourth quarter. JPMorgan Chase and Citigroup lost more than 4% in pre-market trading, while Wells Fargo gained just over 1%. The latter exceeded expectations with earnings per share of $1.25, against 1.13 estimated by Refinitiv. The country’s largest institution, JPMorgan reported a 28% jump in revenue from investment banking, but revenue from its trading business fell 13%. Finally, strong growth in Citigroup’s investment banking division was offset by increased spending.
At 2:45 p.m., the Bedroom 40 lost 1% to 7,129.06 points in a business volume of 1.75 billion euros. The contracts future March on US indices fell between 0.7% and 1%.
March on the Fed’s agenda
The banking sector signed the best performance of the S&P 500 last year and the movement should continue this year, indicated Ipek Ozkardeskaya, senior analyst at Swissquote, this morning. ” So if the big banks’ results turn out to be anything but extraordinary, the tide could quickly turn. The risk is therefore that, even if the results are brilliant, they do not lead to a fall in prices. “, he had warned.
Current Federal Reserve Governor Lael Brainard is the latest official to call for a rate hike as early as March. During her confirmation hearing for the post of vice-president of the central bank, she recalled that the Fed plans “ several rate hikes this year. We will be in a position to do so…once the asset purchases are complete “. This program is due to end in March, paving the way for a rate hike at the March 15-16 FOMC meeting. Patrick Arker, Charles Evans and Mary Daly, the presidents of the Chicago, Philadelphia and San Francisco Feds, joined several of their colleagues in calling for a tightening of monetary policy. Fed Governor Christopher Waller said he favors a quick series of four or five rate hikes if inflation does not come down.
” Everyone is very nervous right now because everyone [les types d’actifs] will potentially come under pressure from an aggressive Fed policyd,” said Kyle Rodda, a market analyst at IG in Melbourne, quoted by Reuters. There is hope that the transition to monetary policy normalization will be slow and painless, he adds, but this is not necessarily assured as the Fed takes inflation very seriously “.
EDF falls heavily
EDF drops by 15.3%. The measures announced by the French government to limit the rise in electricity prices could reduce the gross operating surplus by 7.7 to 8.4 billion euros this year, the group estimated based on the current market prices. Oddo BHF downgraded the value from “outperformance” to “neutral”. In its wake, Engie yields 1.2%.
Kering loses 3.1%, L’Oreal 2.3%, LVMH 1.8% and Hermes 1.7%. Associated with the sector, EssilorLuxottica plaice of 1.8%.
Elior loose 5.3%. Moody’s lowered the catering group’s credit rating to B1 from Ba3. The agency justifies its decision by the anticipation of a slower recovery due to the wave of infections with the Omicron variant. However, the outlook for the rating has been raised from negative to stable.