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Paris (AFP) – The Paris stock exchange rebounded cautiously on Wednesday morning, welcoming the holding of an exceptional meeting of the European Central Bank (ECB) that restored the tone to banking stocks ahead of a monetary decision by the US central bank (Fed).
At 11:15 am, the CAC 40 index regained 0.81% to 5,998.08 points after six sessions of decline.
“Some investors are on the hunt for bargains after the recent drop in indices. They may think the Fed’s feared acceleration of monetary normalization tonight, a 75bp rate hike, is now discounted,” notes Franklin Pichard, director. by Kiplink Finance.
The Fed’s Monetary Committee will unveil the extent of its further monetary tightening to tame inflation on Wednesday at 18:00 GMT, a decision to be followed by a long-awaited press conference by Fed Chief Jerome Powell.
The option of a 50 basis point hike hasn’t entirely gone off the radar, but the 75 basis point hike has ballooned in the past few days after the release of an acceleration in US consumer prices in May.
Another market catalyst, the European Central Bank announced an exceptional meeting on Wednesday morning, a week after announcing a tightening of its monetary policy to fight inflation, accompanied by a growing gap in borrowing costs between eurozone states.
The imminence of this surprise meeting relaxed the sovereign debt market in the euro zone, which supported the equity market. The Italian 10-year rate fell by more than 20 basis points to 3.95% after exceeding 4% since the beginning of the week.
“The ECB appears to be stealing the show a little from the Fed today, but the US central bank remains the main market event,” said markets.com analyst Neil Wilson.
According to him, the ECB should “tell the markets that it is working on a new instrument / plan” in the face of the risk of financial fragmentation in the euro area.
The public debt rates of countries considered fragile have recently risen much more than German rates and this gap has accelerated after the ECB announced last week its intention to start a cycle of rate hikes in July, its key rates for fight inflation.
ECB officials have repeatedly reiterated in recent weeks that they are ready to act urgently if the risk of fragmentation of the sovereign debt market increases, but many observers have complained about the absence of a concrete solution presented by the institution.
On the stock side, financials have regained momentum after suffering a lot earlier in the week: Axa rose 2.93% to € 23.06, Crédit Agricole by 2.62%, BNP Paribas by 2.24% and Société Générale by 2. , 07% around 11:13 am.
EDF took 1.86% to 8.31 euros. A renationalisation of EDF to allow it to build new nuclear reactors has not yet been decided, but “it is not ruled out,” Energy Transition Minister Agnès Pannier-Runacher said Tuesday.
© 2022 AFP