The Paris Stock Exchange continued, this Thursday, the rebound that it had started yesterday, well helped by information from the Bloomberg agency talking about a new stimulus plan of 200 billion dollars in infrastructure in China, coming s add to the previous ones, for a total of 160 billion dollars, announced in the last weeks of the first half. At this stage, this information – which Bloomberg has from people familiar with the discussions, who have asked not to be identified because they are not authorized to speak publicly – is only at the stage of rumors, but the statements of the Chinese Prime Minister on the worrying state of health in which the world’s second largest economy finds itself gave them credit. Li Keqiang, quoted by state media, believes that“Right now, the economy is recovering, but the foundations are unstable. You have to work hard to stabilize the economy. » The remarks were made during a meeting with senior officials from Shanghai and the provinces of Guangdong, Fujian, Jiangsu and Zhejiang.
The prospect of new infrastructure spending benefited stocks of mining companies and those of metal companies and commodity traders. On the Paris Stock Exchange, ArcelorMittal gained 5.5%, signing one of the best performances in the Cac 40. Anglo-American and glencore gained 6% to 7% in London, while ThyssenKrupp ends with a gain of just over 7% in Frankfurt. The Stoxx European index of “basic resources” (+5.4%) is by far the strongest sectoral increase on the Old Continent. Oil prices, weighed down in recent days by the intensification of fears of a recession to the point that Brent briefly fell below 100 dollars a barrel yesterday, have started to rise again today. Brent prices recovered more than 4%, to $105 a barrel. TotalEnergies rebounded 3.6% after falling 9% in two sessions. oil services companies Vallourec and Technip Energiesapart from the Cac 40, have also moved forward.
In the end, the Parisian flagship index gained 1.6%, to just over 6,000 points. On Wall Street, where the major indices are progressing around 1%, Caterpillar climbed 4%, signing the best performance of the Dow Jones.
A Fed perceived as less aggressive
The stock market was also able to count on a certain easing of concerns about “super-raising” of interest rates by central banks to fight inflation. In the minutes of the Fed’s latest monetary policy meeting, investors could note last night that some US central bank officials realized that interest rate hikes could have an impact “larger than expected” on economic growth. They concluded that the Fed might not be as aggressive as feared in its next rate hikes, even if it remains firmly committed to fulfilling its price stability mandate.
The size of the next rate hike, 50 or 75 basis points, expected at the end of the month “will depend on the next data, and in particular the employment report for June (expected on Friday) and consumer prices for the same month (expected next Wednesday)”, says Paul Ashworth, economist specializing in the United States at Capital Economics. He adds that comments from Fed officials after the June meeting suggested a 75 basis point rate hike was the most likely option in late July. But, recent developments suggest that the odds of a 50 or 75 basis point tightening are 50-50. For his part, Jim Reid, strategist at Deutsche Bank, notes that “The recent weakening in data has helped equities by containing Fed expectations.”
Published at the start of the afternoon, the minutes of the meeting of the European Central Bank’s monetary policy committee in June underlined, for their part, that numerous factors justify a 25 basis point increase in key rates in July, although several members wanted to reserve the possibility of a bigger tightening.
Boris Johnson resigns, the pound rises
On the foreign exchange market, however, the euro remains on a downward trend against the dollar, getting closer and closer to parity with the greenback. On the other hand, the pound sterling appreciates, supported by the announcement of the resignation of Boris Johnson from his post as leader of the Conservative Party and, in effect, from the post of Prime Minister.
“Expelling Johnson from politics will transform Britain’s fundamentals […] which will be clearly favorable to the pound sterlingcomments Anatole Kaletsky, at GaveKal Research. Some reconciliation between the European Union and Britain is almost certain […]. Any new Prime Minister, even if he is a staunch Eurosceptic, will not have this ideological rejection of Johnson for any cooperation or convergence with EU rules and institutions, including those dealing with politically innocuous issues like standards veterinarians, student exchanges or scientific research. »
The timetable for the process of choosing his successor as leader of the party will be announced next week, he said outside 10 Downing Street. However, the appointment of a new Prime Minister should not take place before the autumn.