The Cac 40 up nearly 1%, the ECB remains unclear on monetary tightening


The Paris Stock Exchange is about to end the week, shortened, with a slight gain after the status quo of the European Central Bank on its interest rates. The ECB has confirmed that it intends to end its asset purchase program (APP) in the third quarter, without further details. The absence of a horizon for real monetary tightening explains the rise in the market on the eve of a long weekend. On the foreign exchange market, the euro fell below the bar of 1.08 dollars, its lowest level since May 2020.

At 4:15 p.m., the Bedroom 40 gained 0.92% to 6,602.54 points in a business volume of 2 billion euros. In New York, the Dow Jones takes 0.35%, while the Nasdaq Composite down 1%,

During her press conference, Christine Lagarde was not more specific, contenting herself with indicating that the asset purchase program should probably stop ” at the beginning or end of the third trimester », the debate remaining open within the Board of Governors. As for the question of a rate hike, it would come some time after the end of the APP, according to the ECB statement, a notion which implies “a period of one week to several months “Said the President of the ECB in response to a question.

Upside risks for inflation

More generally, she warned that the war in Ukraine is weighing heavily on confidence and that rising energy prices are weighing on demand and production. Moreover, growth remained weak in the first quarter, and will remain slow in the coming months, as downside risks to growth have increased significantly. Inflation risks have increased substantially and the first signs that inflation expectations are overshooting the target should be watched. Economists are now waiting for the June meeting and the new economic projections from the ECB to find out more.

The trend is generally towards monetary tightening, whether in the United States, Canada, New Zealand and, more recently, in South Korea and Singapore. The Fed has already raised its interest rates by a quarter point to fight inflation and is preparing to raise them by half a point in May and June. In March, the rise in consumer prices fell in “core” data, which excludes the volatile evolution of food and energy, which gives hope that inflation is approaching its peak. Thus, the Federal Reserve could ultimately be led to carry out less monetary tightening than expected, at least that is what the market seems to be hoping for.

The Chinese authorities, for their part, made it clear yesterday that they are considering measures to support the economy, which could involve lowering the reserve requirement rate for the big banks in order to revive an economy weakened by the confinements due to the surge in Covid-19 infections. An announcement to this effect is expected during the day, which benefits in particular ArcelorMittalwhich won 2.2%.

Investors are trying to assess the impact of inflation and bond tensions on this start to the season of quarterly corporate publications, for the moment centered on the big names in French luxury and the main American banks. Mergers and acquisitions activity is also driven by the takeover bid for Twitter by Elon Musk. The Tesla boss is offering $54.20 per social network share for its delisting, or about $43.4 billion. The offered price represents a premium of 18.2% over Wednesday’s closing price and 38% over the 1er April, before the announcement of the entry of Elon Musk in the capital of Twitter up to 2.9%. The action gained 2% in New York, while Tesla fell 3%. Moreover, Goldman Sachs, Morgan Stanley and Citigroup rose by 0.6%, 2.7% and 2% respectively after the publication of their quarterly results, while Wells Fargo loose 6.4%.

Valneva dominates the SRD and EssilorLuxottica the Cac 40

Hermes gains 2.2%. The luxury saddler recorded a 27% jump in revenues to 2.8 billion euros at constant exchange rates in the first quarter, driven by demand for luxury accessories, especially in Europe and across the Atlantic, while that the sector is suffering from the fallout from the war in Ukraine and the measures to combat the coronavirus in China. Hermès also confirmed its medium-term outlook.

The other luxury-related values ​​are also rising, like LVMH (+0.9%), Kering (+1.5%) and L’Oreal (+0.9%)

Publicis gains 1.3% after going from green to red in session. The advertising group reported organic growth of 10.5% in the first quarter, above analysts’ expectations, without however revising its forecast for the whole of the year due to economic uncertainties.

EssilorLuxottica advance of 3.2%. Morgan Stanley raised its target price from 190 to 195 euros while maintaining its opinion to “overweight”. Conversely, Ruby dropped 7.4% as Oddo BHF went from “neutral” to “underperforming” on the stock by lowering its target price from 30 to 27 euros.

Suspended from trading this morning at the company’s request, the share Valneva jumped 11%. The British Medicines Agency has announced that it has approved the vaccine against Covid-19 developed by the group.

At last, ADP gained 4.5% while the Stoxx 600 for leisure travel posted the best sector performance in Europe with a gain of 1.4%. The British low cost airline Wizz Air jumped in particular by 9.5% thanks to a quarterly loss less marked than expected and encouraging figures for summer bookings.




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