(News Bulletin 247) – The Paris Stock Exchange has gone back to its bearish ways, while the Fed and the ECB are not inclined to want to change their monetary strategy right away. The CAC 40 lost 0.85% to 7,340 points.

The decisions of the central bankers weigh on the trend of the Parisian market. The US Federal Reserve is not really close to lowering its key rates in the foreseeable horizon. And the European Central Bank does not intend to slow down in its monetary tightening cycle.

This restrictive orientation of monetary policies on both sides of the Atlantic pull the CAC 40 a little further down, and the Parisian index closed down 0.85% at 7340.77 points.

For the seventh time in a row, the European Central Bank raised its key rates and this time opted for an increase of 0.25 percentage point. “Until then, it had raised its rates by 50 bps (50 basis points or 0.5 percentage points, editor’s note) (four times) or 75 bps (0.75 percentage points, editor’s note) (twice) This moderation suggests that the cycle of increases is nearing its end,” explains Bruno Cavalier, chief economist at Oddo BHF.

Pou Ben Laidler, Global Market Strategist at eToro, this slowdown is not a break, the ECB being “faced with a triple cocktail: inflation still stubbornly high (7%), an economy that resists recession and the consequences of its slowness to raise rates”.

“Inflation has not yet fallen into line, but the tightening of credit conditions is weighing on domestic demand and ultimately on prices. For the past year, faced with an economic slowdown and higher prices for their resources, the banks are more careful in their loan offer, and the demand for credit has fallen sharply. Two phenomena that the recent surge in banking stress could only reinforce, “continues Bruno Cavalier.

This is not a break

Investors must also dissect the outcome of the US Federal Reserve (Fed) monetary policy meeting. 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.

“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 institution likely to fail, lost 50% on Wall Street while Western Alliance dropped nearly 40%.

Casino at the top of the drop gondola

As for values, the vast majority of the CAC 40 is evolving in the red with pronounced releases on Teleperformance (-6.5%) which suffered from a deterioration of Morgan Stanley which lowered its opinion on the value to “weighting online” and slashed its price target to 240 euros. The research department believes that the specialist in outsourced customer relations now lacks catalysts to rebound on the stock market.

Down 16.4% at the height of the session, Casino limited its decline to 5.7% after publishing a decline in sales in France and net debt in France which is not falling, despite the disposals. of assets.

Airbus lost 1.9% while its first quarter results, slightly above expectations, did not hold any major surprises.

On the small and mid-cap side, Valneva stood out (+24.45%) hailed for having made a good start to 2023 after a difficult period due to its multiple disappointments in the marketing of its anti-Covid vaccine. .

On other markets, the euro fell 0.5% against the dollar to 1.1011 dollar. Oil prices are stabilizing following a heavy correction. The North Sea Brent contract for July delivery is stable at 72.36 dollars a barrel while the June contract on New York-listed WTI is down slightly by 0.3% at 68.42 dollars. the barrel.