Cac 40: The stock market is having trouble digesting the new ECB policy, which is turning into a monetary hawk

(BFM) – The CAC 40 fell for the third time in a row, falling 1.4% on Thursday, as investors tried to digest the scale of monetary tightening that the European Central Bank could pursue in the coming months.

Virtually stable in the middle of the session before Christine Lagarde’s press conference, CAC 40 decided to give up after learning about the conclusions of the last ECB meeting on monetary policy. The base index of the Paris Stock Exchange fell 1.4% to 6358.46 points, thus signing the third session in a row, trading volumes rose sharply to almost 3.5 billion euros. It is therefore not surprising that the European Central Bank has approved the termination of its program to buy assets in the markets. The president of the institution directly announced an increase in interest rates by 25 basis points (0.25 percentage points) in July, which will be the first rate increase since May 2011, but also signaled that in September he may make a new turn and if necessary more stronger, a priori by 0.5 points.

Such a prospect threatens the error of monetary policy, says Bill Papadakis, strategist at Lombard Odier. Unlike the Fed, which benefits from a growing US economy, the ECB faces a less strong economic situation than before the pandemic, much lower wage growth than the United States, and a greater vulnerability to the conflict in Ukraine. By raising key rates by more than 2% in the long run (which is in line with current expectations), the ECB will pursue a truly restrictive monetary policy, which, according to experts, the zone’s economy is unlikely to withstand.

The end of the free credit era and the risk that a European tightening will lead to an even slower European economy (which is likely to affect the performance of large US companies given the weight of the zone) have also slowed down Wall Street. , but less noticeable, with the fall of US indices by 0.5-0.6% at the time of closing Europe.

EDF and DBV shine

As for Parisian values, DBV Technologies not only continued, but also highlighted the rebound caused by the success of Wednesday’s study, which confirms the effectiveness of its patch for desensitizing peanuts in children with allergies, gaining more than 28% after 14% yesterday.

EDF (+ 6%) also shone with information-driven Echoes “Returning 100% of EDF to the state is one of the new government’s priority projects to be implemented after the parliamentary elections,” the economic newspaper explained.

The automotive sector has fallen after MEPs voted Wednesday to end sales of new petrol, diesel and even hybrid cars in 2035. Stellantis fell 1.8%, while Renault limited the decline to -0.55%.

For ETI, the 3D printing specialist Prodways received 3.8% for announcing a partnership with distributor Dental Axess, which is opening up new markets for its MOVINGLight printers, including Australia, among others.

Cybergun doubles its revenue

Among the speculative files of the moment on the Paris coast, Cybergun offered a surge of 19% after announcing a doubling of its turnover in the 1st quarter.

Rising oil prices have slowed somewhat with new sanitation measures in China, which is likely to slow recovery in demand in the country, but a barrel of black gold remained well above $ 120. Futures on Brent traded at $ 123.56 at the end of the day and on WTI at $ 121.92. Oil is still torn between new health measures in China, containment of demand in the country and expectations of rising prices to $ 150 by several observers, including the head of Trafigura, a large oil brokerage company and a maritime charter company.

As not necessarily a reassuring consequence of ECB intervention, the euro fell 0.53% to $ 1.0661, suggesting that traders believe the institution is unlikely to have the funds to prove its monetary tightening policy: ” Starting the Normalization Process at this stage of the cycle is a real challenge for our eyes, ”said Nicholas Forest, Head of Candriam Bond Management.

Guillaume Bayr – © 2022 BFM Bourse

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