Like other European markets, the Paris Stock Exchange posted limited gains pending the European Central Bank’s monetary decision. The market is also picking up corporate releases as it prepares for a flurry of quarterly releases from the US banking sector.
The trend is generally towards monetary tightening, in the United States, Canada, New Zealand and, more recently, in South Korea and Singapore. In New York, the Nasdaq Composite, sensitive to changes in interest rates, nevertheless closed Wednesday with a 2% rise, interrupting a series of three consecutive declines.
Mid-session, the About 40 it gained 0.49% to 6,574.52 points in a turnover of 880 million euros. The contracts future on US indices it hovers just above equilibrium.
Towards a rate decision in June?
The Governing Council of the ECB will publish its monetary policy statement at 1.45 pm, before Christine Lagarde’s press conference, scheduled for 2.30 pm. No interest rate decision is expected, but the central bank could give more guidance on the withdrawal of its asset purchase program, without setting a specific date. Like its American counterpart, the European Central Bank is more concerned about inflation, which hit a record 7.5% in the euro zone, than about the war in Ukraine. It has also already indicated that it will only raise its interest rates once quantitative easing is done.
No major decision is therefore expected for today, but the June meeting, during which the new economic projections will be presented, could be an opportunity to clarify the evolution of monetary policy. Be that as it may, Christine Lagarde it will have to recognize that inflation is much higher than expected. And, in our view, monetary officials should hurry to push their rate hike program forward once again as inflation continues to surprise on the upside. “Says Andrew Kenningham, Chief Economist Europe at Capital Economics.
EssilorLuxottica and Hermès at the helm of the Cac 40
The US Federal Reserve 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. Meanwhile, consumer price inflation has eased in the core data, which excludes volatile developments in the food and energy sectors, raising hopes that inflation will approach peak. Therefore, eventually, the Fed may be induced to proceed with less than expected monetary tightening, at least that’s what the market seems to be hoping for.
Chinese authorities clarified yesterday that they are considering taking measures to support the economy, which could include lowering the reserve requirement rate of big banks in order to revive an economy weakened by confinement due to the epidemic. An announcement to this effect is scheduled for the day, which benefits in particular ArcelorMittalwhich gained 1.9%.
Hermes earn 2%. The luxury saddler recorded a 27% jump in revenues in the first quarter to 2.8 billion euros at constant exchange rates, driven by the demand for luxury accessories, especially in Europe and across the Atlantic, while the sector suffers from the fallout of the war in Ukraine and measures to combat the coronavirus in China. Hermès also confirmed its medium-term prospects.
The “exceptional” activity of Hermès in China in the first quarter despite the resurgence of Covid-19 also allows Remy Cointreau (+ 2.5%) e Pernod Ricardo (+ 2%) in rebound.
Rising in the opening, Advertise it is almost stable (+ 0.3%). The advertising group recorded organic growth of 10.5% in the first quarter, higher than analysts’ expectations, without however revising its forecasts for the full year due to economic uncertainties.
Essilor Luxottica advance of 2.7%. Morgan Stanley raised the target price from € 190 to € 195, while maintaining its opinion on “overweight”. In reverse, Ruby it fell by 4.9% while Oddo BHF went from “neutral” to “underperforming” on the stock, reducing the target price from 30 to 27 euros.
At the end, ADP gained 4% while the Stoxx 600 for leisure travel recorded the best performance in the sector in Europe with a gain of 1.4%. The British low-cost airline Wizz Air in particular, it jumped by more than 7% thanks to a less pronounced quarterly loss than expected and encouraging for summer bookings.