Cac 40 returns below 6000 after Fed mega-raise, market news

After gaining 1.35% on Wednesday, the Paris Stock Exchange is treading water on the first exchanges after the announcement of a significant increase in interest rates by the US Federal Reserve to curb inflation. Investors are wondering about the continuation of the campaign to normalize monetary policy in the US.

At 9:15 am Bedroom 40 lost 0.86% to 5979.64 points.

The Federal Reserve raised the federal funds rate by 75 basis points on Wednesday night, the biggest increase since 1994. The move was widely anticipated by the markets following last Friday’s announcement of an 8.6% increase in consumption-on-demand price increases from a year ago. one year, a level not seen since December 1981, especially since five-year inflation expectations from the University of Michigan study were the highest since June 2008.

In the direction of increasing by the same amount in July?

Speed federal funds is now in the range of 1.5% to 1.75% and the central bank is planning further increases this year, but its chairman, Jerome Powell, has indicated that deep tightening will not be the norm in the next few months. However, he hinted at a 50-75 basis point rate hike in July and said he was confident in the Fed’s ability to control inflation, while acknowledging that it ” take some time “.

The Federal Reserve expects the federal funds rate to be 3.4% at the end of the year and 3.8% in 2023, according to the famous “dot plot”, a dot plot that illustrates monetary policy committee members’ expectations. Finally, the growth forecast was cut from 2.8% to 1.7% for 2022, and the inflation forecast was raised from 4.3% to 5.2%.

The Bank of England enters the fray

Wall Street hailed the Fed’s commitment to fighting inflation, pushing the S&P 500 up 1.5% and the Nasdaq Composite up 2.5%. Reflecting the prospect of monetary tightening ahead, the 2-year US bond yield, reflecting inflationary expectations, fell 21 basis points to 3.30% this morning, while the 10-year yield fell 7 basis points to 3.35%.

The market is awaiting the noon monetary decision of the Bank of England (BoE), which should raise the repo rate by a quarter of a percentage point to 1.25%. But some economists are wondering if the Bank of England will be tempted to rise by half a point after a mega-raise from its US counterpart. The afternoon will also depend on three US indicators: new home construction, weekly jobless claims and the Philadelphia Fed activity index.

Rexel raises the bar

Rexel increased by 3.7%. The electrical distributor raised its 2022 targets and unveiled its forecasts for the 2022-2025 period before holding an investor day from 1pm.

euronext increased by 2.7%. JPMorgan raised its recommendation on the stock market platform from neutral to excellent to 101 euros.

Angie loses 1.6%. The energy company said it faced a drop in gas supplies following new export restrictions imposed by Moscow, adding, however, that the group’s customers were not affected.

Wendel flounder 1.4%. The investment company announced the decision of the chairman of the board André François-Poncet to leave his functions, adding that the name of his successor will be announced in the second half of the year.

Dasso Systems gives 1.1%. The 3D design software publisher has confirmed its EPS target of €1.20 by 2024, ahead of an investor’s day.

Saint-Gobain decreased by 1.4%. Moody’s upgraded the group’s rating from Baa2 to Baa1 with a stable outlook. The rating agency especially welcomes ” strong operating performance in 2021 and sustained momentum in the first months of 2022 from the manufacturer of building materials.