The Paris Stock Exchange rebounded on Wednesday, reassured by statements from the European Central Bank (ECB) following a surprise meeting on eurozone borrowing conditions. The CAC 40 index recovered 1.35% to 6030.13 after six sessions of decline. The ECB has instructed its teamsspeed up“new instrument design”anti-fragmentation» combat excessive interest rate dispersion between northern and southern eurozone countries.
The institution further promised to apply “some flexibility in reinvestment» bonds held under its Pandemic Emergency Program (PEPP). These announcements, made at the end of the extraordinary meeting of the Board of Governors,reassured the market because it means that the ECB is keen to fight inflation, but takes into account what is happening in the financial market and, in particular, borrowing ratescommented Ilana Azuelos-Bossar, deputy director of Kiplink Finance.
“The ECB is concerned about rising borrowing rates, especially in heavily indebted countries such as Italy.“, adds Ilana Azuelos-Bossard. Indeed, the bond market has been very tight for several days. In one week, the French ten-year debt rate rose from 1.8% to 2.4% on Tuesday, while the Italian debt rate jumped at the same time from 3.4% to 4.18% Same trend fromdistribute”, the gap between the rate of one country and another reference country, in this case Germany for Europe, which has clearly increased. Which meant that “The specter of eurozone rate fragmentation appears to be taking shape”, — emphasizes the analyst of Kiplink Finance. Interest rates fell sharply after the ECB’s statement on Wednesday. At the same time, investors are still waiting for the evening statements by the US Federal Reserve (Fed) on the tightening of monetary policy. The option of a 50 basis point rate hike has not completely disappeared from view, but speculation of a 75 basis point or even 100 basis point hike has intensified in recent days following the publication of accelerating consumer price inflation in the United States in May.
Finances are on the mend
Shares in the banking and insurance sectors recovered after a strong fall at the beginning of the week due to fears of a recession. Axa rose 2.97% to €23.06, Crédit Agricole up 2.48% to €9.05, BNP Paribas up 2.01% to €48.29 and Société Générale up 2.86% to €23. 06 euros.
EDF on the rise
EDF rose 3.43% to 8.44 euros. The renationalization of the EDF to allow it to build new nuclear reactors has not yet been decided, but it “it is possibleEnergy Minister Agnès Panier-Runashe said on Tuesday.
The EDF Central CSE (CSEC) also believes that the EDF is not “wouldn’t make it to the end of the yearif the government keeps the measures put in place as part of its tariff shield to keep household bills down.
Green Acquisition at TotalEnergies
TotalEnergies (-1.02% to €53.53) announced it has acquired a 49% stake in Compagnie des Bois du Gabon (CBG) and its 600.00 ha of forests from which the oil and gas group wants carbon credits to offset its greenhouse gas emissions .