ECB mobilized in the face of rate hikes, market rises… pending Fed decision, Market News

Investors have long marked June 15 as the date for the US Federal Reserve’s (FRS) decision on monetary policy. What they didn’t know was that the European Central Bank (ECB) would also meet. The meeting urgently decided to discuss ” current market conditions “.

Meeting for a penny?

Faced with rising government borrowing costs, raising concerns about a debt crisis, especially in peripheral countries, led by Italy, the monetary institution chaired by Christine Lagarde organized an exceptional meeting… after all, did not decide much new compared to with what was reported during the last meeting, June 9th. PEPP (pandemic emergency plan) reinvestment will potentially be used to support spreads (yield spreads) between eurozone countries, and the ECB has confirmed it is working on a tool ad hoc anti-fragmentation to combat the constant and unjustified expansion of rates of return. ” Most likely, this new instrument will be announced in July, when it can raise the key rate for the first time since 2011. says Ulrike Kastens, DWS Europe Economist.

Much Ado About Nothing and an Authority That Doesn’t Growlaunches Frank Dixmier, in charge of bond management at Allianz Global Investors. Unable to raise rates, unfettered by the negative impact of tightening monetary conditions on the countries with the most weakened public finances (most notably Italy), the ECB seems to be losing focus.. »

In the stock market, this still had little effect. in Bedroom 40 accelerated to an increase of 1.35%, to 6030.13 points, completing six consecutive sessions of decline. The volume of transactions is almost 3.9 billion euros. In Milan FTSE Eb rose by 2.9%. In the secondary debt market, the yield on Italian 10-year bonds, which this week crossed the 4% mark for the first time since 2014, fell to 3.82% at the height of the debt crisis, causing distribute with Germany at 2.17% compared to more than 2.4% on Tuesday.

75 basis points

On the other side of the Atlantic, it’s time for a rebound too Dow Jones, S&P500 and NASDAQ Composite growth from 0.5% to 1.7% within hours of the Fed’s verdict. Faced with soaring inflation, which accelerated to 8.6% y/y in May, what will be the position of the US central bank? If it is known that rates federal funds will grow further, it remains to be seen to what extent: 50 basis points, 75 basis points, 100 basis points? No more scenarios seem to be out of the question, even if, according to FedWatch CME Group’s barometer analysis, the market is betting nearly 95% on a three-quarter point hike in interest rates. federal fundsin a new range of 1.50% to 1.75%, which would be the biggest increase at the meeting since 1994.

ECB mobilized in the face of rate hikes, market surges... pending Fed decision

ECB mobilized in the face of rate hikes, market surges... pending Fed decision
ECB mobilized in the face of rate hikes, market assesses … pending Fed decision | Photo credit: CMEgroup

If the Fed surprises with a 50 basis point hike, the market will certainly opt for relief. But the main goal of the Fed now is to curb inflation, not stimulate stock markets. And depressed stock markets seem necessary to that end. Now that the 75 basis point upside pill has been swallowed up by the market, it would be irrational for the Fed not to continue with an even bigger increase. ”, analyzes Ipek Ozkardeskaya of Swissquote.

Well-Oriented Banks and Luxury

As for the values, the banks used their chances. BNP Paribas, Societe Generale as well as Agricultural loan occupied from 2.01% to 2.86%. Luxury stocks rebounded after better-than-expected performance in China, one of the sector’s main markets. Thereby, Kering rose by 2.58%, which was also supported by the recommendation of Jeffreys. The American broker upgraded his “hold” to “buy” opinion, while lowering his target price from 695 to 605 euros.

Apart from Cac 40, EDO scored 3.43%. ” All options on the table As for the future electrician, 84% controlled by the state, French Minister of Economy and Finance Bruno Le Maire said on BFM TV, answering a question about the possible nationalization of the group.

fauresia won 4.96%. Stifel analysts note that, having overcome the hurdle of capital increases associated with the takeover of Hella, investors will be able to focus on selling assets. The broker “buys” shares. Vice versa, Athos loses another 5.2%, the day after falling 23%.