The Paris Stock Exchange fell 1.24% on Wednesday, nervous ahead of the conclusion of the meeting of the American central bank (Federal Reserve, Fed), fearing that the latter will raise its rates more than expected.
The star CAC 40 index lost 80.50 points to 6,395.68 points. The day before, it had rebounded 0.79%.
Barring an regarding-face, the Fed will increase its key rates to control stubborn inflation in the United States, a delicate battle far from being won with the risk of plunging the country into recession, which is causing “not a lot of worries”, according to Alexandre Neuvy, director of private management at Amplegest.
Market players have been anticipating the announcement of a half-percentage point hike for several weeks, the first of this magnitude since May 2000.
“The Fed’s strategy is to slow inflation with surgical actions to avoid slowing the economy too much, but there is no indication that it will succeed and in past examples the economy has contracted more than expected,” explained Alexandre Neuvy, who does not completely rule out the possibility of a rate hike of 0.75 points.
Traders will also be watching for indications of the Fed’s balance sheet reduction and upcoming key rate hikes.
The decisions and the press conference of the president of the institution, Jerome Powell, were expected following the closing of the European stock exchanges.
The bond market was nervous awaiting these announcements. The French 10-year interest rate reached 1.50% around 6:25 p.m., the highest since 2014. It was still only 0.2% at the start of the year.
In addition to the expected Fed monetary tightening, the European Commission’s proposal for a gradual embargo on Russian oil and petroleum products purchased from Russia, in retaliation for the war in Ukraine, was driving up oil prices. black gold.
Brussels is also proposing to exclude three additional Russian banks – including Sberbank, the country’s largest institution – from the Swift international financial system.
These sanctions, however, still need to be approved by EU member states and Hungary has rejected the gradual oil embargo.
Nevertheless, “equity markets are only focused on interest rates” and “the other elements – company results, macroeconomic statistics – do not make them move”, noted Alexandre Neuvy.
EDF remains limited by nuclear power
EDF announced on Wednesday a strong increase in its turnover in the first quarter thanks to the rise in electricity prices, while warning that this would not necessarily translate into the results while nuclear production is limited this year. The title lost 2.47% to 8.38 euros.
Maisons du Monde confirms its objectives
Maisons du Monde experienced a “slow” first quarter, but maintains its objectives for 2022, despite a difficult context. Its title gained 4.24% to 16.47 euros. The group has also entered into a governance agreement with its two main shareholders.
