The Paris Bourse rose on Monday, supported by easing expectations of a “mega-hike” in US Federal Reserve rates, as well as reports that China is pressuring banks to finance projects. real estate following a boycott movement by individual owners on their loan repayments.
The low trading volumes, with barely 550 million euros traded on Cac 40 securities, nevertheless betrays the caution of investors three days before the European Central Bank’s monetary decision and the end of maintenance operations. on the Nord Stream 1 gas pipeline. The market will also watch, this afternoon, the quarterly results of Bank of America, Goldman Sachs and IBM.
Mid-session, the Bedroom 40 rose 1.27% to 6,112.37 points. Elsewhere in Europe, the Dax of the Frankfurt Stock Exchange gained 1.18% and the FTSE Eb Milanese 1.32%. The contracts future on US indices rose by around 1%.
The ECB on a tightrope
The ECB is preparing to raise its key rates by 25 basis points on Thursday in order to fight against inflation, which reached 8.6% in the euro zone in June, and whose final figures will be published tomorrow. The central bank must also present the main lines of its project intended to prevent the risk of fragmentation in the region and in particular a surge in the yields of the most fragile countries, such as Italy.
The ECB will also have to take political risk into account as Mario Draghi will seek a vote of confidence from the Italian Parliament on Wednesday. On this vote will depend the possible resignation of the President of the Council, whom the President of the Republic had already rejected last week after the refusal of the senators of the 5 Star Movement to vote for a package of aid measures.
Another challenge for the ECB is the end of maintenance operations for the Nord Stream 1 gas pipeline scheduled for Thursday, with the question of whether gas flows to the Old Continent will resume or not in the background. Several European officials fear that the Russian authorities will use the weapon of gas as a means of pressure in the face of sanctions linked to the war in Ukraine.
Towards “limited” tightening to 75 basis points
On the foreign exchange market, the euro is trading at 1.0154 dollars after foraying below parity for the first time in 20 years at 0.9955 last week. On the bond market, the yield on the Italian 10-year BTP rose 11 basis points to 3.3740%.
The market now expects a “limited” rate hike from the US Federal Reserve to 75 basis points next week. A de-escalation of expectations essentially fueled by the comments of Governor Christopher Waller and St. Louis Fed President James Bullard, considered the most “hawkish” of the members of the monetary policy committee and who favor a ¾ point increase in percentage of the funds funds rate.
Last week, the rise in consumer prices to 9.1% year on year in June in the United States had fueled fears of a 100 basis point hike in Fed rates. However, these expectations have fallen thanks in particular to the slowdown in inflation expectations reflected by the University of Michigan survey on consumer confidence.
Solvay will raise its objectives for 2022
The barrel of Brent from the North Sea rose 1.9% to 103.09 dollars, while gas prices also rose in Rotterdam, the heat records in Europe leading to intensive use of air conditioning systems. In Paris TotalEnergies wins 2.5%, Vallourec 5.5% and GTTwhich manufactures valves for transporting liquefied gas, takes 6.4%.
Solvay increased by 4.5%. The chemical group plans to raise its forecast for the whole of the 2022 financial year after a performance significantly above expectations in the second quarter. It is counting on a turnover of between 3.4 and 3.5 billion euros in the second quarter on the basis of preliminary figures and on an underlying gross operating surplus of 855 to 865 million. The quarterly accounts will be published on July 28.
Nexans gains 3.6%. Societe Generale raised its recommendation on the cable manufacturer from “hold” to “buy”.
The other major cyclicals such as banks and luxury stocks are also well oriented. Societe Generale advance of 3.4% and Kering by 3.7%
The automotive sector continues to rebound. Stellantis and Renault rose by 2.6% and Valeo by 3.6%.
An association of employee shareholders and former employees ofEDF announced its intention to lodge a criminal complaint with civil action “against the state for” business distress “. The action remains suspended from listing until further notice and the State will announce its intentions on the nationalization of the electrician on Tuesday at the latest.