The Paris Stock Exchange rose for the second consecutive session, while posting a decline of 1.1% over the week after its fall of nearly 4% on Monday, the largest since the emergence of the Omicron variant. The market is waiting for indications of the US Federal Reserve’s first monetary tightening since 2018. So far, the market has priced in one rate hike in March, followed by three more this year.
Around noon, the Bedroom 40 climbed 2.15% to 6,985.07 points in a business volume of 1.2 billion euros. The contracts future March on American indices gained between 0.95% for the Dow Jones and 1.94% for the Nasdaq 100. The index of “high tech” and American growth stocks lost more than 2% on Tuesday evening. Microsoft is up 4% ahead of the stock market after publishing results and sales above expectations last night thanks to its “cloud” division.
It’s time for the “hawks” to relax
January promises to be the worst first month of the year for the Nasdaq Composite since 2008. Tensions in Ukraine, lowering of IMF global growth forecasts, in particular due to a slowdown in the United States and in China, as well as the Fed’s more “hawkish” turn in the face of inflation at its highest since 1982, largely explain the high volatility of the markets. Investors are therefore waiting to learn more about this last point, on the strength of the “minutes” of the December meeting, while seeking to assess the Fed’s determination to fight inflation and reduce the size of its balance sheet, which approaching $9 trillion.
” The time to relax is probably near for Fed hawks as the Fed has nothing to gain from sending messages ‘hawkish’ today, devastated stock markets won’t help them turn the inflation situation around, notes Ipek Ozkardeskaya, senior analyst at Swissquote.
On the contrary, a plunge in the financial markets would only divert the Fed from what it needs to do and make inflation worse., she warns, adding that fears of over-tightening include announcement of end of QE [assouplissement quantitatif] today, which could suggest successive rate hikes, not one per quarter, and the fact that it could surprise with a 50 basis point hike in March instead of a more likely 25 basis point hike , or choose not to wait until March by raising rates this week.
However, these hawkish expectations are certainly overstated, as the Fed cannot trigger a financial crisis to fix the inflation problem. We are more likely to face a confident and again reassuring Fed in today’s announcement. If the Fed wants to continue its more aggressive stance, it needs to take control of risk appetite “, she nuances.
Renault and Airbus lead the Cac 40
The question of reducing the size of the balance sheet is also on the table. ” A moderate Powell ‘hawkish’ would ‘dovish’ from a market perspectivewrites Steven Englander, head of currency research at Standard Chartered, in a note. If Powell says the FOMC is determined to get inflation back on track while saying he’s confident that a few rate hikes combined with quantitative tightening will suffice, that would be ‘dovish’ in terms of market perception “, he adds.
Biggest increase in the Cac 40, Renault takes another 6% on the eve of a press conference of the Alliance formed with Nissan and Mitsubishi Motor.
Faurecia rises 3.2%. The automotive supplier has announced that the European Commission has authorized it to take a majority stake in its German counterpart Hella. The French group will thus acquire a total of 79.5% of the capital of Hella, including 60% from the pool of the Hueck Family and approximately 19.5% within the framework of the settlement of the public tender offer ended on 11 November 2021.
Airbus increased by 5.1%. The aircraft manufacturer said its Airbus Helicopters division recorded 414 net orders and delivered 388 in 2021, compared to 300 in 2020, confirming the rebound in demand. Morgan Stanley reiterated its recommendation to “outperform” the title to target 135 euros.
Valneva won 8.2%. The group has announced that it has started booster vaccinations for its phase 3 clinical study conducted on its anti-Covid vaccine in adult participants in its study.
Imerys gets 7%. The company, which extracts and sells minerals to industry, is considering selling its “high temperature solutions” business, according to the Bloomberg news agency.
Seb garners 5.7%. The small household appliance specialist has indicated that it is targeting an operating margin on activity of 10% for 2021 thanks to record sales, while its operating profit on activity should “ slightly » exceed 800 million, including additional costs – materials, components, freight, currencies – estimated as anticipated at around 300 million euros.