After a gain of 1.35% on Wednesday, the Paris Stock Exchange is marking time in the first exchanges following the announcement of a major increase in interest rates by the American Federal Reserve to curb inflation. . Investors are wondering about the continuation of the monetary policy normalization campaign in the United States.
At 9:15 a.m., the Bedroom 40 lost 0.86% to 5,979.64 points.
The Fed raised the federal funds rate by 75 basis points on Wednesday evening, the biggest increase since 1994. A gesture widely anticipated by the markets since the announcement, last Friday, of an acceleration in the rise in prices at the consumption at 8.6% over one year, a level not seen since December 1981, especially since the five-year inflation expectations collected by the University of Michigan survey came out at their highest since June 2008.
Towards an increase of the same magnitude in July?
The rate of Fed-funds is now in a range of 1.5% to 1.75% and the central bank plans further hikes this year, but its chairman Jerome Powell has indicated that deep tightening will not become the norm in the next few months. monetary policy committee meetings. He nevertheless hinted at a 50 to 75 basis point hike in July and said he was confident in the Fed’s ability to control inflation, while conceding that this “ will take time “.
The Federal Reserve expects the fed funds rate to be at 3.4% at the end of the year and at 3.8% in 2023, according to the famous “dot plot”, a dot chart illustrating members’ expectations. of the monetary policy committee. Finally, the growth forecast was lowered from 2.8% to 1.7% for 2022, while that concerning inflation was raised from 4.3% to 5.2%.
The Bank of England enters the fray
Wall Street hailed the Fed’s commitment to fighting inflation with a 1.5% rise in the S&P 500 and 2.5% in the Nasdaq Composite. Reflecting the prospect of forthcoming monetary tightening, the yield on the 2-year US bond, which reflects inflation expectations, tightened by 21 basis points to 3.30% this morning, and that of the maturity at 10 years by 7 basis points to 3.35%.
The market awaits the midday monetary decision of the Bank of England (BoE), which should raise its repo rate by a quarter of a percentage point to 1.25%. But some economists are wondering if the BoE will be tempted by a half-point hike after its US counterpart’s mega-hike. The afternoon will also be driven by three US indicators: housing starts, weekly jobless claims and the Philadelphia Fed activity index.
Rexel raises its targets
Rexel increased by 3.7%. The distributor of electrical equipment raised its objectives for 2022 and presented its forecasts for the period 2022-2025 before holding a day dedicated to investors from 1 p.m.
Euronext increased by 2.7%. JPMorgan raised its recommendation on the stock market platform from “neutral” to “outperformance” to target 101 euros.
Engie loses 1.6%. The energy company said it had seen a drop in gas deliveries after the new restrictions on exports decided by Moscow, adding however that the group’s customers were not affected by the situation.
Wendel plaice of 1.4%. The investment company reported on the decision of the chairman of the management board, André François-Poncet, to leave his functions, adding that the name of his replacement would be announced during the second half of the year.
Dassault Systems yields 1.1%. The 3D design software publisher confirmed its earnings per share target of 1.20 euros by 2024 ahead of an investor day.
Saint Gobain down 1.4%. Moody’s raised the group’s rating from “Baa2” to “Baa1”, with a stable outlook. The rating agency particularly welcomes ” the strong operational performance in 2021 and the sustained momentum of the first months of 2022 from the manufacturer of building materials.