The Paris Stock Exchange should start again this morning in the wake of the rebound on Wall Street last night and Asian markets this morning. The trend promises to be volatile once again with the rise in oil prices, the resumption of discussions between Ukraine and Russia and the expectation of the US Federal Reserve’s monetary decision on its interest rates.
On Wall Street, the three main American indices rose on Tuesday evening, the S&P 500 registering its first increase since last Wednesday, thanks to the fall in oil prices and the weaker than expected increase in producer prices in the United States. last month.
In Asia, the Hang Seng of the Hong Kong Stock Exchange rebounded nearly 9% this morning, boosted by the rise of more than 10% in the index of technological stocks, and the Chinese CSI 300 recovered 4.3% . Vice Premier Liu He said he would work to stabilize capital markets and strengthen the economy in the first quarter, Xinhua reports.
Risk of default on Russian debt?
On the geopolitical front, talks between Ukraine and Russia are due to resume on Wednesday. An adviser to President Zelensky said negotiations were difficult, but said there were still chances for a compromise. Separately, Russia began the process of paying bond coupons amounting to $117 million due on Wednesday. A grace period of 30 days is associated with these payments before a possible default.
The US Federal Reserve is set to announce its first interest rate hike since late 2018. a margin of 0.25% to 0.5%. But observers will mostly be watching the Fed’s new economic projections and expectations for upcoming rate hikes. The famous “dot plot” will be carefully examined “ taking into account that that of December 2021 has now passed “, note analysts at BNY Mellon Markets in view of inflationary and geopolitical tensions.
Powell and the Fed’s dot plot
And to recall, that on this date, the [projection] The committee’s median for the federal funds rate projected three rate hikes this year, three more next year and two in 2024. This projection is now clearly outdated. “, according to them. They see a potential for four or more more upsides on the median, but we’re also aware that the uncertainty around global events could cause a sharp divergence of views between the hawks and doves of the committee, with two ‘types’ of charts reflecting the forecasts of both groups “.
The Fed statement will be released at 7 p.m., then Jerome Powell will begin his press conference at 7:30 p.m. It is notably expected on the reduction of the balance sheet of the Fed, which reaches nearly 9,000 billion dollars. If the question should not be decided before May, analysts believe that the question of a quantitative tightening of monetary policy by the Fed clearly arises.