(News Bulletin 247) – The Chairman of the Federal Reserve, Jerome Powell, has made statements that leave investors doubtful. Comments by Treasury Secretary Janet Yellen also concern them.

The Federal Reserve (Fed) seems not to have totally succeeded where the European Central Bank did easily last week: reassuring investors. At mid-session, the CAC 40 lost 0.46% to 7,098.67 points.

“While investors were relieved to see that this week hasn’t (yet) brought further instability to the banking sector, they are somewhat concerned by what they heard yesterday from the Fed and the Treasury Secretary Janet Yellen,” said Craig Erlam of Oanda.

The Fed, as expected by the market, raised its key rates by a quarter of a point, or 25 basis points or 0.25%. But the overall message sent by the institution and the statements of its president, Jerome Powell, leave investors skeptical.

“The Fed raised its interest rate by a quarter point, as expected, but acknowledged the impact of the recent banking turmoil and signaled that it may be on the verge of pausing the tightening cycle” , remarks UBS.

Yellen grips the market

The Fed’s “rhetoric” “raised concerns about banking conditions and the likelihood of an economic recession, which drove markets lower,” said Tina Teng of CMC Markets.

In addition, Jerome Powell’s press conference came at the same time as Treasury Secretary Janet Yellen’s speech. The latter ruled out the possibility of guaranteeing all of the deposits of American banks without obtaining the approval of the American Congress.

“In short, there was a total lack of consistency since one of the parties [Powell, NDLR] said depositors should expect their money to be completely safe, but the other party [Yellen, NDLR] failed to provide insurance for all cash deposited by depositors,” judge Naeem Aslam of Zaye Capital.

Note that a waltz of central banks have taken decisions on their rates. This is the case of the Swiss National Bank or the Bank of Norway. The Bank of England will take its own at 1 p.m.

Casino and Rally in the hard

In terms of values, Sanofi (+5.3%) is driven by successful clinical results for its flagship drug, Dupixent, which could potentially be used to treat “smoker’s bronchitis”.

Conversely, Teleperformance lost 5%, the market worrying about the group’s decision to finally pursue the moderation of shocking content, a source of controversy. At the end of 2022, the company had initially decided to end this activity.

Casino suffered, falling 8.3%, while its parent company Rallye lost 15.3%. The latter published its annual results on Wednesday evening. Under judicial safeguard proceedings since 2019, like the other holding companies of Jean-Charles Naouri, CEO of Casino, Rallye announced that “the risk factor linked to the implementation of safeguard plans [était] increased”.

The company indicated that it was going to approach its creditors “in order to examine the possibilities and the possible modalities of the development of its safeguard plan”. Debted to the tune of 2.82 billion euros, Rallye must repay in 2025 a total of 2.067 billion of various liabilities, according to the safeguard plan. However, the execution of this plan depends mainly on Casino’s ability to pay dividends, which the distribution group does not intend to do for the 2022 financial year. Rallye’s difficulties could force Casino to accelerate its deleveraging and sell assets under pressure.

On the other markets, the euro is almost stable against the dollar, at 1.0876 dollars. Oil prices are down a bit. The May contract on Brent from the North Sea fell 0.5% to 76.34 dollars a barrel while that of the same term on WTI listed in New York dropped 0.8% to 70.38 dollars a barrel.