The Paris Stock Exchange recouped its losses on Tuesday (-2.7%), and fears of a “super-hike” by the central bank to curb inflation are showing signs of appeasement for now. The trend is further boosted by Bloomberg reports of new stimulus measures in China through a 1.5 trillion yuan ($225 billion) bond issue in the second half of the year, representing an unprecedented acceleration in infrastructure financing.
Recently, due to massive lockdowns related to China’s zero Covid policy, mining and steel stocks such as Stoxx 600 Core Resources stand out, showing the sector’s best performance in Europe with a 5.7.% gain. ArcelorMittal increased by 6.6% and Eramet by 7.2%. Among other values associated with raw materials, Total Energy is gaining 4.1% and Vallorec 8.3%. Other cyclical stocks such as banks and cars are also in demand. Societe Generale (+4%), Renault (+6.4%) and fauresia (+8.4%). Alstom advance payment on our part 7.2%.
Shortly after 4:00 pm Bedroom 40 increased by 1.59% to 6,006.29 points after a peak of 6,024.31 (+1.89%) on a business volume of 1.65 billion euros. In other European countries Dax German gains 1.92%, while FTSE Eb Milanese 2.81%. In New York Dow Jones and NASDAQ Composite an increase of 0.67% and 1.17%, respectively. chip manufacturers AMD, Nvidia as well as Intel rose 3%, encouraged by Samsung’s sales growth of 21% and better than expected in the second quarter. In Paris, STMicroelectronics is gaining 2.4%.
Boris Johnson resigns, pound rises
On the foreign exchange market, the pound sterling gained 0.7% to $1.12001, helped by confirmation of Boris Johnson’s resignation as leader of the Conservative Party. The timetable for the selection process for his successor as party leader will be announced next week, he said at 10 Downing Street. However, the appointment of a new prime minister should not take place until autumn. For its part, the euro is stabilizing just below $1.02, approaching parity with the US dollar after falling more than 10% since the start of the week, which has returned it to its lowest point since 2002.
Minutes of the ECB’s June meeting of the ECB’s monetary policy committee released earlier in the day underline that many factors justify a 25 basis point hike in key rates in July, although some members wanted to reserve the possibility of further tightening. Finally, some officials have noticed signs of increased demand for higher wages.
The “minutes” of the Fed’s monetary policy committee meeting in mid-June confirmed last night the US central bank’s resolve to contain inflation, even at the cost of slowing activity. The meeting concluded with the announcement of a 75 basis point Fed rate hike, the largest since 1994.
The size of the next rate hike, 50 or 75 basis points, is expected at the end of the month.” will depend on the following data, and in particular on the employment report for June (expected Friday) and consumer prices for the same month (expected next Wednesday)says Paul Ashworth, chief US economist at Capital Economics.
He adds that the Fed’s comments after the June meeting suggested a 75 basis point rate hike was the most likely option at the end of July. But recent events show that there is a 50-50 chance of a 50 or 75 basis point tightening. For his part, Jim Reid, strategist at Deutsche Bank, notes that: recent weakening data helped stocks, curbing Fed expectations “.
In the bond market, the US 10-year yield slipped 3 basis points to 2.9538%, but remained below the 2-year yield in a yield curve reversal that broadly reflects fears of a sharp slowdown in economic activity.