The Paris Stock Exchange only managed to continue its rebound with great difficulty. the Bedroom 40, up yesterday after four weeks of decline in a row, closed this Tuesday session up slightly (+0.27% to 7,028.41 points), after gaining up to 1% in session. The new surge in bond yields on the secondary debt market has weakened initiatives taken. The rate of ten-year debt securities in the United States is flirting with 1.97%, the highest since the summer of 2019. On this side of the Atlantic, the yield on German sovereign bonds of the same maturity has crossed 0.27% for the first time in three years when it was still moving into negative territory less than a month ago.
“Long-term yields have hit new highs as markets adjust to recent news flow”notes Jim Reid, strategist at Deutsche Bank in London. “The turnaround hawkish of the European Central Bank last week, as well as the monetary policy committee of the Bank of England which lacked only one vote to raise rates by 50 basis points instead of 25, made it clear that the world’s central banks, led by the US Federal Reserve, are determined to respond forcefully to inflation that is at multi-decade highs.”worries Joachim Fels, global economic advisor at asset manager Pimco. “With ECB President Madame Lagarde no longer ruling out a rate hike this year and indicating that recent upside surprises in inflation have sparked a ‘unanimous concern’ within the Governing Council, markets now expect net asset purchases to end later this year and rate hikes of 50 basis points by the end of 2022, implying the exit from the negative interest rate policy. »
Globally, the amount of negative-yielding debt – a major component of the “Tina” mantra, the acronym for There Is No Alternative, which has long fueled stock purchases for lack of anything better – has fallen to less than $5 trillion. against a peak of 18 trillion in 2020. For example, Germany’s two-year debt securities are still trading at rates below 0% (-0.3% against around -0, 65% at the start of the year).
Further acceleration of inflation
While the stock market has been trying for a month to gauge the pace at which the world’s major central banks are going to normalize their monetary policy, the big event this week will be the publication on Thursday of consumer price figures in the United States. United for the month of January. The market expects a further acceleration in inflation to 7.3% over one year, after 7% in December. In this context, economist Ethan Harris of Bank of America Securities sees the Fed, the American central bank, raising seven times this year, by 25 basis points each time (the fastest pace since 2005), ahead of four raises next year. In the euro zone, when the ECB raises its key rates, starting with that of deposit facilities (-0.5% currently), it will be the first increase since 2011.
Sensitive to changes in interest rates, technology companies (which pay dearly on the stock market and which borrow to finance their strong growth) were still among the biggest declines in European markets today. Worldline and Dassault Systems have lost more than 2% on the Cac 40.
BNP Paribas manages to end up
BNP Paribas ends with a gain of 0.47% after having lost as much as 4.5% this morning. The bank published quarterly results that beat expectations, but the performance of the investment and corporate banking (BFI) division disappointed. For Flora Bocahut, of Jefferies, while fourth quarter pre-tax results are in line with expectations, profit before provisions is 11% below consensus due to rising costs. On the other hand, it points out that the amount of the provisions is 50% lower than the consensus and that the new plan should allow a revaluation of the action. Over the whole of 2021, the leading European bank ended the financial year with a record net profit of 9.5 billion euros.
Morgan Stanley raised its recommendation on Axa (+2.2%) from “line weight” to “overweight”. Jefferies has resumed monitoring the aeronautics and defense sector by makingAirbus (+2.4%) its favorite value.
Apart from the Cac 40, EDF lost 1.29%. The electrician announced that it was further reducing its estimate of nuclear production in France for 2022. For the whole of the current year, it anticipates production of between 295 and 315 terawatt hours (TWh), against a previous range of 300 to 330 TWH, already lowered quite recently. EDF will stop three additional reactors in the spring for checks.
Orpea rebounded by almost 9%, signing the best performance of the SRD.