(CercleFinance.com) – The Paris Bourse is expected to give ground once more on Thursday at the opening, the increasingly concrete impact of the Russian-Ukrainian conflict on the world economy outweighing hopes of a future de-escalation of hostilities.
Around 8:15 a.m., the ‘future’ contract on the CAC 40 index – delivery at the end of March – fell 48 points to 6337 points, signaling a modest decline at the start of the session following the sharp recovery the day before.
The Parisian market had started a spectacular rebound yesterday by clinching more than 7% at the close, its highest percentage gain in almost two years, supported by timid signs of easing in diplomatic relations between Kyiv and Moscow .
Igor Zhovkva, the deputy chief of staff of Ukrainian President Volodymyr Zelensky, notably assured that Ukraine was “open” to discussions on the question of its neutrality.
‘The markets interpreted these comments as an encouraging signal that the two countries might come closer to some sort of compromise,’ analysts at Danske Bank reacted this morning.
The Danish bank, however, believes that the optimism shown by the markets regarding an early outcome of the conflict is ‘premature’, while stressing that Ukraine will be forced to accept ‘painful concessions’ in order to obtain a ceasefire agreement -fire.
Faced with all these questions, the oil market is still characterized by intense volatility, the price of Brent having suddenly fallen from 130 to 110 dollars yesterday.
The barrel regained some ground this morning, at 113.6 dollars, although the United Arab Emirates announced that they would call on the OPEC countries to revise their production quotas upwards.
In view of all these elements, the task therefore promises to be particularly complicated for the European Central Bank (ECB), which is meeting its Board of Governors in Frankfurt today.
While the central bank might raise the prospect of an imminent end to its ‘historic’ asset purchase program (APP), it should refrain from providing any specific timetable given the growing uncertainty due to the conflict.
With growth set to slow and inflation set to intensify, the ECB seems to have no choice but to postpone its plans for rate hikes until 2023, with the scenario of a recession now remaining the main risk for the financial markets.
