The Paris stock exchange closes this week shortened by the Easter weekend with a slight rise after the European Central Bank’s status quo on its interest rates. The ECB confirmed in a press release that it intends to end its asset purchase program (APP) in the third quarter, without further details. The absence of a horizon for a real monetary tightening explains the rise in European markets on Thursday, while US indices are down overall. On the foreign exchange market, however, the reaction is the opposite: the euro, down 1%, fell below the 1.08 dollar bar, the lowest level since May 2020.
The Cac 40 closed the session with a gain of 0.72% at 6,589.35 points. Investors, on the other hand, are limiting initiatives 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, Christine Lagarde, President of the ECB, was no longer specific this afternoon, contenting herself with indicating that the asset purchase program is likely to end. “at the beginning or at the end of the third quarter”, the debate remains open within the Superior Council. As for the issue of the rate hike, it would be some time after the end of the APP, according to the ECB statement, a concept that implies “a period from one week to several months”the President of the ECB reported in response to a question.
More generally, Christine Lagarde, more used to lowering the stock market than raising it with her statements, warned that the war in Ukraine weighed heavily on confidence and that rising energy prices were impacting demand and production. . As a result, growth remained weak in the first quarter and will remain sluggish over the next few months as downside risks to growth have increased significantly. Inflation risks, meanwhile, have risen sharply and the first signs that inflation expectations are exceeding the target should be kept an eye on.
Economists are now looking forward to the June meeting and the new ECB economic projections to find out more.
Elsewhere, the trend is to tighten
The trend is generally towards monetary tightening, both in the United States, Canada, Brazil, New Zealand and, more recently, in South Korea and Singapore. The Fed has already raised interest rates by a quarter of a point to fight inflation and is preparing to raise them by half a point in May and June.
In March, the rise in US consumer prices 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. Because yesterday, with the release of the Producer Price Index, which shows a historic cost run (PPI rose 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 are considering measures to support activity, which could involve a reduction in the required reserve rate for large banks in order to revive a weakened economy. from recontentions due to the outbreak of infections from Covid-19.
Hermès on the rise, Nike supports the Dow Jones
On Wall Street, the Nasdaq index of tech stocks, which has the most to lose from rising interest rates, lost 1%, although stocks Twitter are wanted, while Elon Musk offers to buy the social network for 43 billion dollars (Tesla instead it loses more than 3%). The S&P 500 is also down, while the Dow Jones is up by 0.4%, supported in particular by the rise of more than 5% in Nike, the UBS bank strongly recommends buying the shares of the sports equipment manufacturer. On Wall Street we also report the progress of the banks Goldman Sachs, Morgan Stanley and Citigroup after the publication of their quarterly accounts, while Wells Fargo, which also copied them, lost more than 6%.
On this side of the Atlantic, Hermes (+ 2.7%) recorded sales growth of over 30% in the first quarter, much higher than analysts’ expectations. Earlier this week, LVMH (+ 0.9%) had already exceeded market expectations.
Advertise gained 1.8% after a highly volatile session. The advertising group posted organic growth of 10.5% in the first quarter, exceeding analysts’ expectations, but did not raise its forecasts for the full year due to economic uncertainties.
Greater increase of Cac 40, Essilor Luxottica closed with a gain of more than 3%. Morgan Stanley raised the target price from € 190 to € 195, while maintaining its opinion on “overweight”.