(BFM Bourse) – The battle waged by central banks against inflation is having the equity markets as collateral victims. The Paris Stock Exchange, which had just interrupted a streak of six sessions in the red the day before, started to fall again, ending Thursday at -2.4%.
Galloping inflation has brought out of the woods the various fundraisers of the planet, urged to intervene to put out the fire. On Wednesday, the Fed formalized an increase of 0.75 percentage point (unheard of since 1994), after 0.50 point in May. 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 kicked 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%. The Central Bank of England did not fail to follow suit, operating a fifth rate hike in as many meetings. This tightening of monetary policies causes tensions on the bond market, and undermines the valuation of equities. Ultimately this Thursday, the CAC 40 thus lost 2.39%, to 5,886.24 points. The star index in Paris increases its annual losses to more than 17%.
The central bankers’ week will end on Friday with the decision of the Bank of Japan, which is currently following a monetary policy diametrically opposed to that in force in other countries of the world.
“Stock markets are experiencing another day of pain on Thursday, as central banks continue to signal their willingness to sacrifice the economy in order to control inflation,” notes Craig Erlam. The SNB’s rise was perhaps the most surprising of all, with the consensus being that the Swiss central bank would not budge to avoid further strengthening the Swiss franc, boosted by the flight to the safest assets. , the decision of the Bank of England appeared almost soft, the institution acknowledging that inflation should now exceed 11% by October across the Channel, without showing any eagerness to accelerate the tightening by not increasing by more than 25 basis points once again.
Across the Atlantic, the purge reached 4.2% on the Nasdaq, 3.5% on the S&P 500 and almost 3% on the Dow Jones, the indices making a complete reversal compared to the rather unexpected rally of Wednesday evening post-announcement from the Fed.
On the other side of the Parisian stock market, only Orange floated (+0.3%) among the 40 flagship stocks. Engie suffered the biggest fall, yielding nearly 7.3% as the group announces that it has seen a drop in gas deliveries after the restrictions on Russian blue gold.
Rexel, potential candidate to arrive one day in the index since it joined the antechamber, the Next20, has raised its growth and profitability objectives for this year. But the distributor of electrical equipment, up 3% at the opening, ultimately did not resist the tidal wave, yielding 3.7%.
The dark series continued on Atos (-7.3%) 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%. Finally, many speculative files were violently attacked, such as Navya falling by almost 35% or, to a lesser extent, Cybergun and Gaussin (-9% each).
On the small cap side, Xilam Animation limited the decline to -1.6% while Marc du Pontavice’s studio was selected by Disney+ to supply two new exclusive animation series.
Oil prices moved in scattered order, at 116 dollars for WTI and 118.5 dollars for Brent. The single currency, penalized on Wednesday by the Fed’s turn of the screw on rates, was able to rebound at the end of the day by 0.8% to 1.0530 dollars. On the side of crypto assets, Bitcoin was again displayed at less than 21,000 dollars (-3.6%).
Guillaume Bayre – ©2022 BFM Bourse
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Cac 40: The Parisian market loses more than 2%, Wall Street fears the recession
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