(News Bulletin 247) – The CAC 40 is moving down sharply in mid-session on Thursday, the market realizing that the US Federal Reserve is not really close to lowering its key rates in the foreseeable horizon. Investors are now awaiting the outcome of the European Central Bank’s monetary policy meeting.

It’s a very busy Thursday for the market, with the meetings of two major central banks to dissect and many company results to analyze. For now, the CAC 40 is struggling, with a decline of 0.8% to 7,343.12 points at mid-session.

Investors must for the moment dissect the outcome of the monetary policy meeting of the US Federal Reserve (Fed). The American central bank, as expected by the market, raised its key rates by 25 basis points, or 0.25%, and softened its communication, by withdrawing from its press release passages which, in its previous communications, referred to to potential further increases. This signals a pause in its monetary tightening cycle.

“While the consensus was expecting a break after last night’s rate hike and a drop before the end of the year, it will have to change its mind,” notes however John Plassard of Mirabaud. “If Jerome Powell [le président de la Fed, NDLR] announced (more or less officially) a pause in the monetary institution’s rate hike, it is (for now) unlikely that the pivot (the rate cut) will be near,” he adds.

Casino once again in the hard

“What was not expected [par le marché, NDLR]this is a strong statement that rates will remain elevated, likely for the rest of the year, as core inflation is not yet under control, with a labor market still remarkably resilient.” Edouard Bouhyer, director of investments at Eric Sturdza bank.

This unaccommodating tone from the Federal Reserve is putting a little more pressure on US regional banks, some of whose difficulties are linked to the rise in interest rates. PacWest, seen by the market as the next establishment likely to fail, lost 38% in pre-opening trading, while Western Alliance dropped 20.3%.

The market is now watching the outcome of the meeting of the European Central Bank (ECB). The research departments rather evoke a rise in rates of 25 basis points knowing that an increase of 50 points constitutes another possibility.

As for values, Casino fell 10% after having published a decline in sales in France and a net debt in France which is not falling, despite the sale of assets.

The vast majority of the CAC 40 is in the red with pronounced releases on Publicis (-7.7%) and Teleperformance (-6.5%).

Airbus lost 1.2% while its first quarter results, slightly above expectations, did not hold any major surprises.

On other markets, the euro fell 0.1% against the dollar to 1.1055 dollar. Oil prices are regaining some momentum. The North Sea Brent contract for delivery in July advanced 1% to 73 dollars a barrel while that for June on WTI listed in New York rose 0.7% to 69.08 dollars a barrel.