Volatility remains on the Paris Stock Exchange, which is quick to react to the slightest development in the conflict in Ukraine and to any information concerning inflation and monetary policy. A spokesman for the Kremlin cast a chill by declaring this morning that reports of major progress in talks with Ukraine are wrong. He nevertheless indicated that the negotiations are continuing on Thursday. According to the Russian Foreign Ministry, the discussions include military, political and humanitarian aspects.
At mid-session, the Cac 40 takes 0.31% to 6,609.29 points in a business volume of 1.2 billion euros. The contracts future March on US indices fell around 0.2% after Wall Street’s strong rise on Wednesday.
In the euro zone, consumer prices rose by 5.9% year on year in February, thus setting a new record, against 5.8% estimated at first sight. Energy prices are the primary contributor to the inflation rate. Investors raised their expectations for rates in the euro zone after the US Federal Reserve hiked its interest rates. The ECB nevertheless has “ additional margins between the end of asset purchases scheduled for this summer and the first increase in its interest rates for more than ten years, said Christine Lagarde on Thursday.
The quarter-point hike in the federal funds rate announced last night by the Fed was widely expected, much less the announcement that this tightening will be followed by six others this year, or seven hikes in total, it is i.e. one at each of the meetings scheduled for 2022. Three more are scheduled for 2023 and one more the following year.
Jerome Powell was careful to insist that the US economy is strong enough to absorb these rate hikes, adding that he saw no risk of recession despite the surge in prices. Observers are also reassured by the determination of the Fed, like the Biden administration, to stem the inflationary spiral.
Inflation will remain high this year
For the Fed, inflation will remain at a high level until the middle of this year and will take longer than expected to return to figures in line with the 2% objective. It is still seen at 2.7% at the end of 2023 (2.3% excluding energy and food). We will know more in May on the expected reduction in the size of the balance sheet, which peaks at nearly 9,000 billion dollars. Monetary policy will still be relevant on Thursday with the Bank of England’s decision.
New rumors about Atos
Biggest drop within Cac 40, Renault fell 4.1% following a degradation of Exane BNP Paribas, which went from “outperformance” to “neutral” on the diamond mark. The broker is also cautious towards manufacturers and equipment manufacturers exposed to Europe. Stellantis yields for its part 1.8%. New car registrations also fell by 5.4% in February in the European Union.
Exposed to Russia, Alstom (-3.3%) and Societe Generale (-0.7%) suffered profit taking.
Main supporters of the flagship index, TotalEnergies appreciated by 0.8%, boosted by the 4.7% rebound in Brent prices, and LVMHwhich gains 1.1%.
Veolia Environment gains 1.7%. The environmental services group expects an increase of nearly 10 billion euros in billings, from 28.5 billion in 2021. Current net profit would increase by more than 20% this year. The stock rose 3%.
Atos jumped 4.8%. Airbus took an interest in the cybersecurity branch of the business digital transformation group, without making an offer, according to BFM Business. Atos reiterated that this business is not for sale.