The prospect of a tightening of monetary policy by the US Federal Reserve (Fed) is back in force as Western powers prepare to adopt new sanctions against Russia. An explosive cocktail for the equity markets, Wall Street closed sharply lower on Tuesday. The Paris Stock Exchange should follow, this Wednesday.
Fed Governor Lael Brainard said on Tuesday that the “ most important task is to work to fight inflation, adding that the central bank will also have to start reducing the size of its balance sheet from May in order to bring its policy towards ” a more neutral stance » during the year.
A few hours from the minutes of the Fed
She also came out in favor of raising the federal funds rate by half a point next month. His remarks were all the more striking since Lael Brainard is considered one of the most dove members of the Federal Reserve’s (FOMC) monetary policy committee. 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 be even more closely followed. In the bond market, the yield on the US 10-year bond rose above 2.6% for the first time since 2019, and was trading at 2.6164% in Asia this morning.
The barrel of Brent from the North Sea is stabilizing around 106.70 dollars as the risk of shortages remains high as Europe and the United States prepare to adopt a new package of sanctions against Russia. Washington is expected to unveil new measures on Wednesday banning all 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 a halt to coal imports and the closure of its ports to Russian ships, without attacking oil or gas.
Successful capital increase for EDF
On a separate note, activity in China’s services sector contracted in March at its fastest pace since February 2020, with the index compiled by Caixin falling to 42 points from 50.2 in February. 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.
On the value side, EDF announced the success of the capital increase of more than 3.16 billion euros intended to strengthen its balance sheet and subscribed for the most part by the State.
Renault. 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 AvtoVaz would disappear from the group’s balance sheet if the manufacturer decided to cease its activities in Russia.
Among analyst ratings, JPMorgan downgraded Klépierre from “neutral” to “underweight”. Goldman Sachs went from “neutral” to “sell” on Paris airports (ADP).