The resistance of the Cac 40 yesterday could find support in the strength of the Asian markets as confidence in the banking sector remains fragile to say the least, even if the recent rescue operations have reassured. Investors’ attention is also focused on the evolution of central bank policy.
In Hong Kong, the Hang Seng index rose by more than 2%, driven by the technology compartment after the announcement by Ali Baba of a major restructuring plan. The e-commerce giant plans to split into six companies, which could go public.
Alibaba stock jumped 13.5% after a 14.3% gain in its New York-listed stock. The video game giant Tencent Holdings appreciates by 2%. In Tokyo, Softbank, shareholder of Alibaba, won 6.2%. This split project, which seems to have the backing of local authorities, could signal the end of the repressive regulatory constraints imposed by Beijing against the technological compartment.
The Fed’s balance sheet under scrutiny
Wall Street ended in slight decline on Tuesday, hampered in particular by the decline in growth stocks, and in particular technology. Consumer confidence nevertheless saw a surprise improvement in March despite the upheavals that shook the banking sector, but Americans’ inflation expectations remain high at 6.3% over one year, after 6.2% in FEBRUARY.
The market is pricing the probability of a 25bp rate hike by the Fed at more than 50% in early May, before a break. However, many strategists believe that the US central bank should not cut rates this year. Investors will therefore closely monitor the state of the Fed’s balance sheet, as presented each Wednesday, with the volume of transactions, in value, carried out by financial institutions with the central bank.
On the bond market, the yield on the US 2-year bond tightened slightly, thus signaling a slight renewed appeal for risky assets, while that of the German Bund of the same maturity rose to 2.57% after falling around 2% at the worst of the banking turmoil.
The absence of significant development in the sector has helped to allay investor fears somewhat, but several establishments, including Societe Generale et BNP Paribaswere searched by the National Financial Prosecutor’s Office as part of an investigation for tax evasion and laundering of tax evasion and incur a total fine of more than 1 billion euros.
On the value side, trigano reported a rebound in its turnover in the second quarter of its 2022-2023 financial year and expects a further increase in sales in the second half, thanks to the improvement of its supply chains.