The Paris Stock Exchange ends this week shortened by the Easter weekend with a slight gain after the status quo of the European Central Bank in its interest rates. The BC confirmed in a press release that it intended to end its asset purchase program (APP) in the third quarter, without further details. The absence of a horizon of real monetary tightening explains the rise of the European markets on Thursday, while the American indices fell in general. On the other hand, in the foreign exchange market, the reaction is the opposite: the euro, with a 1% drop, falls below the bar of 1.08 dollars, its lowest level since May 2020.
The Cac 40 closed the session with a gain of 0.72% to 6,589.35 points. However, investors have limited initiative as the stock market will be closed tomorrow, Good Friday and Easter Monday.
“At the beginning or at the end”
During the traditional press conference that followed the meeting of European central bankers, cristina lagardethe president of the ECB, was not more specific this afternoon, limiting himself to indicating that the asset purchase program should probably be stopped “at the beginning or end of the third trimester”, leaving open the debate within the Governing Board. Regarding the question of the rate hike, it would take place some time after the end of the APP, according to the ECB statement, a notion that implies “a period of one week to several months”reported the President of the ECB in response to a question.
More generally, Christine Lagarde, more accustomed to lowering the stock market than raising it through her statements, warned that the war in Ukraine weighed heavily on confidence and that rising energy prices were affecting demand and production. As a result, growth remained weak in the first quarter and will remain sluggish in coming months as downside risks to growth have increased significantly. In the meantime, inflation risks have increased substantially and the first signs should be watched that inflation expectations are outperforming the target.
Economists now await the June meeting and new ECB economic projections to find out more.
Elsewhere, the trend is to harden
The trend is generally towards monetary tightening, either USAit is Canada, Brazil, New Zealand and, more recently, South Korea and Singapore. The fed it has already raised its interest rates by a quarter point to fight inflation and is preparing to raise them by half a point in May and June.
In March, the rise in consumer prices in the United States fell in the “core” data, which excludes the volatile evolution of food and energy, which gives hope that inflation has peaked. Or rather, it gave hope. Given yesterday’s release of the Producer Price Index, which shows a historic runaway in costs (PPI up 11.2% in March), economists are no longer so sure that consumer prices will not progress further.
Contrary to the general trend, the Chinese authorities for their part made it clear yesterday that they were considering measures to support activity, which could include a reduction in the rate of mandatory reserves of the large banks to reactivate an economy weakened by the re-containment due to to the outbreak of Covid-19 infections.
Hermès on the rise, Nike supports the Dow Jones
On Wall Street, the Nasdaq index of technology stocks, which has the most to lose from rising interest rates, lost 1%, although stocks Twitter looking for each other, whileElon Musk offers to buy the social network for 43 billion dollars (Tesla instead it loses more than 3%). The S&P 500 also falls, while the Dow Jones rises 0.4%, supported in particular by the rise of more than 5% in Nike, the bank UBS strongly recommends buying the shares of the manufacturer of sports equipment. On Wall Street, we will also see banks Goldman Sachs, Morgan Stanley and Citigroup advance after publishing their quarterly accounts, while Wells Fargo, which also did its copy, fell more than 6%.
On this side of the Atlantic Hermes (+2.7%) reported a sales growth of more than 30% in the first quarter, much higher than expected by analysts. Earlier this week, LVMH (+0.9%) had already exceeded market expectations.
you publicize gained 1.8% after a highly volatile session. The advertising group posted organic growth of 10.5% in the first quarter, above analysts’ expectations, however, raise its forecast for the whole year due to economic uncertainties.
Greater increase in the Cac 40, Essilor Luxottica closed with a gain of more than 3%. Morgan Stanley raised its price target from €190 to €195 while maintaining its view at “overweight”.