The indices remain erratic, proof that investors lack visibility. Growth is threatened by future rate hikes, necessary to curb inflation.
The bitter battle between the bears (bearish market) and the bulls (bullish) on the stock market causes upheavals, which ultimately leave the indices without real direction. These tremors mainly reflect the deep uncertainty that has dominated the markets since the start of the war in Ukraine on February 24.
There are many reasons to be pessimistic, starting with the risk of slowing growth. While the decline of the pandemic in Europe and the United States suggested that the recovery would be vigorous in 2022, inflation is cutting into the purchasing power of consumers on both sides of the Atlantic. The central bankers therefore signaled the end of the game. Jerome Powell, the chairman of the US Federal Reserve, even threw a chill on Thursday, adopting a more aggressive tone. He suggested investors may have underestimated the pace of upcoming rate hikes. With a 50 basis point hike expected in May and June, the market concluded that perhaps a 75 basis point hike would be on the cards.
China is also the second source of concern regarding the slowdown in global growth. The reconfigurations demanded by Beijing to fight against the resurgence of the pandemic should reinforce the shortages of products.
Frédéric Rollin, strategist at Pictet AM, considers that Europe has more advantages than Wall Street, which he finds expensive. “The bond alternative in Europe is not yet in place against European equities, whose performance remains better, dividends reinvested. On the other hand, high savings should protect purchasing power. »
The last rather encouraging point for the markets is the sinews of war: companies. The first to publish have not revised their forecasts downwards. On the contrary, some have even raised their objectives.
SYLVIE AUBERT