The Paris Stock Exchange is trading at a two-week low, as “hawkish” comments from a US Federal Reserve official heighten tensions in the debt market in a climate already weighed down by the war in Ukraine and the specter of new Western sanctions against Moscow.
Mid-session, the Bedroom 40 fell 1.49% to 6,546.32 points in a business volume of 1 billion euros. The contracts future on American indices yield between 0.5% and 0.8%.
The electoral risk also weighs following a Sopra Steria Cevipof poll for The world this Wednesday crediting Emmanuel Macron with 26.5% of voting intentions in the first round, against 21.5% for Marine Le Pen, compared to 28% and 17.5% respectively during the previous survey conducted from March 21 to 24 . This propelled the yield of the French 10-year OAT above 1.2% for the first time since 2015 before returning to around 1.9%.
The yield spread with the German Bund of the same maturity is at its highest since March 2020 at around 53.5 basis points, which is weighing on banks. BNP Paribas, Agricultural credit and Societe Generale lose between 2% and 2.5%. Technology stocks are also affected, STMicroelectronics and Worldline yielding almost 3%. In addition, Jefferies went from “buy” to “hold” on TotalEnergys (-1%) citing the war in Russia and political risk in France ahead of the first quarter results.
Towards a rapid reduction in the Fed’s balance sheet?
Fed Governor Lael Brainard said on Tuesday that the “ most important task is the fight against inflation, adding that the central bank will also have to focus on reducing the size of its balance sheet from May, and on a ” fast pace “, in order to bring its policy towards ” a more neutral stance » during the year.
She also came out in favor of raising the federal funds rate by half a point next month. ” These comments are all the more significant since Ms. Brainard is typically one of the most ‘dovish’ of the FOMCnotes Jeffrey Halley, market analyst at Oanda. If it went over to the super-hawks, the market will have to take that into account, and it did.. QE’s honeypot [assouplissement quantitatif] is about to be closed “, he adds. Investors fear that a more restrictive policy could lead to a slowdown in the American economy, or even a recession. Scheduled for 8 p.m., the publication of the “minutes” of the last FOMC meeting will only be more closely followed.
Washington is expected to present new measures on Wednesday prohibiting any new investment in Russia. Banks, state enterprises and certain members of the government would also be targeted, as well as two daughters of Vladimir Putin, according to the press and American agencies. The European Union has already announced that it plans to stop coal imports and close its ports to Russian ships, without attacking oil or gas. Important Russian business leaders and oligarchs would also be targeted according to the FinancialTimes which cites a draft EU document.
Klépierre degraded by JPMorgan
LVMH and Kering and Hermes lost 1.7% and 2.8% respectively in reaction to the contraction of activity in the services sector in China last month. The resumption of the coronavirus epidemic has reduced mobility and weighed on demand as the confinement of the 25 million inhabitants of the city of Shanghai has been extended.
Klepierre down 3.2%. JPMorgan has degraded the title of the property from “neutral” to “underweight”.
Renault yields 1.9%. Moody’s confirmed the group’s credit rating at “Ba2” with a negative outlook. The rating agency considers that the suspension of the group’s industrial activities in Russia constitutes a ” setback “. But it also notes that the 1.1 billion euro debt of the Russian subsidiary of AvtoVaz would disappear from the group’s balance sheet if the manufacturer decided to cease its activities in Russia.
In the same sector, Stellantis plaice by 4.2% and Faurecia 3.6%, registering at the same time a low of one year.
Conversely, defense value, Thales takes another 1.5%.