Published on : 22/09/2022 – 11:20Modified : 22/09/2022 – 11:19
Paris (AFP) – The Paris Stock Exchange was down Thursday, the day after a clear message from the US central bank, which will apply an even more restrictive monetary policy to eliminate inflation at the expense of growth.
After a sharp decline at the opening, the CAC 40 index lost 0.40% to 5,928.54 points around 10:50 a.m. On Wednesday, the Parisian rating rebounded by 0.87%, its first closing in the green after six consecutive sessions of decline having taken place before the Fed’s communication.
“The priority remains a rapid rise in key rates and a deterioration in the labor market. Nothing very positive for investors for the coming months,” notes Christian Parisot, at Aurel BGC.
The US central bank raised its key rate by 0.75 percentage points on Wednesday, as in June and July, to bring it to a range of 3% to 3.25%.
Investors weren’t surprised by this monetary tightening, which was expected, but by the hard line adopted by the Fed in its new projections for the evolution of rates.
The key rate should exceed 4.50% next year, while operators have seen it so far mostly stay below this threshold. Central bankers ruled out any rate cut before 2024, which caught markets betting on the second half of 2023 by surprise.
Commentators are expecting an increase of 75 basis points at the next meeting of the Fed’s monetary policy committee in November, followed by another 50 basis points in December.
In the wake of the Fed, the Swiss central bank raised its key rate by 75 basis points to set it at 0.5% in order to counter the inflationary pressure that has increased in Switzerland, thus ending more than seven years of negative rates.
The Bank of Norway raised its key rate by 0.5 points on Thursday for the third consecutive time, to 2.25%, its highest level since the end of 2011.
The Bank of England is expected to announce another rate hike to 2.25%, an increase of 0.5 percentage point, as in August, which was a first since 1995.
On the French macroeconomic table, the business climate deteriorated in September, with business leaders being more pessimistic about their activity and their prospects, according to INSEE.
Banks thrive on rates
The banking sector was thrilled by the context of rate hikes: top three of the CAC 40, Societe Generale rose by 1.62%, BNP Paribas by 0.97% and Crédit Agricole by 0.88%.
Double news about Veolia
The group (-0.88% to 21.41 euros) announced its intention to make its water and waste services in France energy self-sufficient, with the production over 5 years of more than 2 terawatt hours (TWh) of local energy “to fully cover the equivalent of its current consumption”.
In addition, Suez announced that it had signed an “irrevocable promise to purchase” with Veolia on Wednesday to acquire, for two billion pounds (2.3 billion euros), the former waste management activities in the United Kingdom. Kingdom of the former Suez group.
© 2022 AFP