The Paris Bourse takes a little height, in the wake of resistance from Wall Street, which significantly reduced its losses at the close. In addition, the Nasdaq managed to interrupt a cycle of four consecutive sessions of decline, which allows technology stocks to regain color. The associated Stoxx 600 posted the best sector performance with a gain of 1.9% the day after a decline of 3.6%, to a low of nearly three months, against a backdrop of tensions on the interest rate markets.
At 10:45 am, the Cac 40 gained 1.45% to 7,218.70 points in a business volume of 750 million euros.
Investors are therefore taking advantage of the recent decline in equities following the change in perspective of the US Federal Reserve. The latter considers that the recovery of the American economy is sufficiently solid to support a tightening of its monetary policy in order to counter inflation. The market is awaiting comments from Jerome Powell on this point, hoping for indications on the timing of the Fed’s rate hikes.
Four rate hikes expected this year
Markets remain focused on the US consumer price statistic, which will be released on Wednesday, as inflation, which has surged in recent times, may have risen 7% year-on-year in December, thus increasing pressure on the Federal Reserve.
From two to three rate hikes anticipated until recently, the market now expects four Fed tightening this year, as well as the implementation of its balance sheet reduction process in the second half of the year. Some observers believe, however, that several transient factors such as tensions on supply chains and disruptions related to the Omicron variant should subside, which could give the central bank more leeway.
Does the Fed have an interest in sowing chaos?
” The question is, does the Fed have any interest in wreaking havoc on the markets for the sole purpose of fighting inflation? The answer is no, says Ipek Ozkardeskaya, senior analyst at Swissquote. And to continue: this is why everything will depend on the indicators and, in view of the recent ‘hawkish’ reversal of the market, it is possible that we will see a calming of this positioning, which could lead to a favorable correction after the recent selloff on equities “.
In remarks sent to senators ahead of his Senate hearing this afternoon, Jerome Powell says the Federal Reserve will do everything to prevent inflation from taking hold. He adds that the nature of post-pandemic growth may be different from previous periods of expansion. ” The pursuit of our objectives will have to take this difference into account. “, did he declare. Senators are expected to confirm Jerome Powell’s reappointment for a second term at the head of the Fed, and they will be sure to question him about the price pressures and the timing of the rate hikes.
Luxury and “techs” shine again
Biggest increase in the Cac 40, Kering 3.9% lead. RBC, which is “outperforming” on value, believes that the group is one of the players in the luxury sector most likely to make a significant acquisition this year given the strength of its balance sheet. In addition, its flagship brand, Gucci, should experience an acceleration in its growth, while that of the rest of the sector should stabilize, writes the author of the note. RBC has also raised its price target on LVMH (+ 2%) from 785 to 820 euros. Hermès takes 1.7%.
Capgemini gathers 3.2%. Jefferies took over the cover of the SSII with “purchase” to target 270 euros. Other technology stocks are also picking up colors in the wake of the Nasdaq. STMicroelectronics gain 2.8%, Dassault Systèmes 2% and Teleperformance 1.8%.
Aperam gains 5.4%. Deutsche Bank has resumed monitoring the “buy” stocks with a price target of 67 euros.
Finally, Technip Energies wins 5%. The group has announced that it will buy back 1.8 million of its own shares from TechnipFMC, which reported the sale of 9 million shares for 118.4 million euros. TechnipFMC has decided to exit from the Parisian coast.