Up 1.32% at the best of the session, the Paris Stock Exchange reduced its gains. Largely inspired by contracts future on US indices, the initial progression looks like a burst of “bear market” while the Cac 40 is about to align a sixth weekly loss in seven weeks. The summer rally was totally absorbed by the “hawkish” turn adopted by central banks, the surge in inflation and the rise in tensions between Russia and Western countries.
Vladimir Putin has just announced the creation of four Russian administrative regions in Ukraine, thus formalizing the annexation of the territories consulted by referendum. The inhabitants of Luhansk, Donetsk, Kherson and Zaporizhya thus become ” our citizens forever said Vladimir Putin. He also called on Ukraine to stop fighting and resume negotiations, while ruling out any negotiations on the territories it has just annexed.
Around 2:45 p.m., the Bedroom 40 gained 0.70% to 5,716.51 points. For now, the index is losing 3% over the July-September period, thus aligning three consecutive quarters of decline, the longest series since 2009. Contracts future on American indices gained between 0.1% and 0.2%. Nike plunged more than 11% in pre-market in New York as the sports equipment manufacturer lowered its annual margin forecast and saw its stocks jump 44% during the past quarter. In Europe, Puma fall of 6.7% and Adidas by 5.4%.
Cyclical, banking and commodity-related stocks are benefiting from cheap purchases that could result from balance sheet dressing operations on this last day of the third quarter. BNP Paribas thus gaining 1.7%, TotalEnergies 1.8%, Publicis 2.6% and Unibail-Rodamco-Westfield 5.8%.
At least 75 basis points for the ECB
Investors this morning took the shock of a record inflation rate in the euro zone. The rise in consumer prices there reached 10% over one year in the first estimate for September, against 9.7% expected by the market and 9.1% in August. The statistic comes the day after the announcement of double-digit inflation in Germany, the first since 1951, and reinforces expectations of energetic action by the ECB.
” Given the strength of inflation and continued signs of price pressures, we expect the ECB to raise rates again by at least 75 basis points at its end-October meeting, at a minimum of 1.5%reacts Jessica Hinds, senior economist for the euro zone at Capital Economics. And, despite the risks of a deeper recession, we are not ruling out a larger upside. Overall, we expect the main deposit rate to reach 2% before the end of the year, with further hikes to follow early next year that would take it to 3%. And the risks of that happening remain on the upside. “, she warns.
A recession would not prevent rate hikes
In the United States, household income rose by 0.3% as expected in August, while household spending rose by 0.4% against +0.2% expected. The “core” PCE index of personal consumption expenditure, a measure of inflation monitored by the Fed, stands at 4.9% over one year, against 4.6% in July and 4.7% expected. To follow, the final index of consumer confidence from the University of Michigan for the month of September, but especially the component of inflation expectations at 1 year.
The prospect of a cycle of permanently high interest rates is regularly hammered home by Federal Reserve officials. James Bullard, president of the St. Louis branch, said yesterday that investors will not be able to escape sharp rate hikes in the coming months, while his Cleveland colleague Loretta Mester warned that a recession n would not prevent the Federal Reserve from tightening its monetary policy.