Cac 40: The battle of central banks against inflation plunges the CAC 40

Cac 40: The battle of central banks against inflation plunges the CAC 40

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(BFM Bourse) – Central banks dictate the trend. Up sharply the day before, reassured by the actions of the ECB on the spread of sovereign rates between member countries of the euro zone, the Paris Stock Exchange lost more than 2% at midday. The US Federal Reserve made a historic hike in its rates on Wednesday evening, a tightening of its monetary policy which has the effect of causing tensions on the bond market.

For aficionados of central bank meetings, you are served. Galloping inflation has brought out of the woods the various fundraisers of the planet, strongly requested by the markets to intervene to put out the fire. In the night, the Central Bank of Brazil raised its rates for the eleventh time in a row. Banque auriverde was followed a few hours later by the Swiss National Bank, which had just withdrawn from its reserve by kicking off its monetary tightening cycle. It proceeded for the first time in 15 years, to a turn of the monetary screw by lowering its key rate from -0.75% to -0.25%. Other increases are on the agenda to try to tame inflation at its zenith.

The Central Bank of England’s response to inflation will be due at 1:00 p.m. as the country is also plagued by runaway prices. It is expected to raise rates for the fifth consecutive time. On Wednesday, the Fed formalized a 0.75 percentage point increase in its key rate, after 0.50 point in May, the highest since 1994. Jerome Powell indicated that such an increase was not likely to reproduce, while arguing that the July meeting would result in an increase of 0.5 or 0.75 percentage points depending on the economic weather in the United States.

A little earlier in the day, it was up to the European Central Bank to provide answers to the markets in its fight against inflation and the yield gap between German bonds and more fragile countries in the zone at the image of Italy. The central bankers’ week will end on Friday with the decision of the Bank of Japan which follows a monetary policy diametrically opposed to that in force in the other countries of the world.

The CAC 40, which had recovered 1.35% on Wednesday, reassured by the actions of the ECB, plunged 2% to 5,904.91 points after having fallen to 5,884.43 points. The star index in Paris increases its annual losses to more than 17%.

The tightening of monetary policies is once again fueling tensions on the bond market. The 10-year US Treasury bond peaked at 3.44%, while its European counterparts were not left out: the German Bund of the same maturity rose to 1.80%, as did the French 10-year bond which tightened at 2.38%.

Euroapi at the head of the provisional CAC 41

On the business front, Euroapi takes the lead in the provisional CAC 41 index with a gain of 2.5%, followed by Vivendi (+0.5%) and Thalès (+0.2%)

On the other side of the Parisian stock market, Engie dropped nearly 8% as the group announced that it had seen a drop in gas deliveries after the restrictions on Russian blue gold.

Rexel, which could eventually join the CAC 40 index, believes that it is in a position to move up a gear in terms of profitable growth over the 2022-2025 period, starting with an increase in its objectives for this year. The distributor of electrical equipment, however, yields 2.7%.

Atos continues its black series and still sells nearly 7% still in the wake of the forthcoming departure of its CEO and the project to split the company into two separate listed entities. Since the beginning of the year, it has sunk by more than 66%.

Oil down

On the small cap side, Xilam Animation is giving back 2% while Marc du Pontavice’s studio has been retained by Disney+ to supply two new exclusive animation series.

Oil prices continue to fall to 117.50 dollars per barrel of Brent (-0.87%) and to 114.85 dollars for WTI, bending under fears of a slowdown in demand against a backdrop of recession. The single currency lost ground at 1.04 dollars penalized by the rise in the greenback after the Fed’s announcements on its key rate policy.

Sabrina Sadgui – ©2022 BFM Bourse

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