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On the eve of the Fed’s decision, the CAC 40 once again ended the session exactly at these opening levels, up 0.56% to 7,290 points.
“The status quo is expected after several FOMC members floated the idea of ​​a pause in June to allow time to observe more macroeconomic data, before a potential new rise in July even if this could disturb the message from the Fed”, says Thomas Giudici, head of bond management at Auris Gestion.
The Fedwatch tool, developed by CME Group allocates a 90.7% probability of a status quo on Fed Funds remunerationwithin a limit between 5 and 5.25%.
Formally, “a surprise cannot therefore be ruled out, as shown by the central banks of Canada and Australia. Bad news during Wednesday’s FOMC could have significant consequences on the US equity markets which have experienced a good run in recent weeks in large part due to the euphoria aroused by artificial intelligence.”
However, the inflation figures published yesterday rather militate for a break. A break which could, however, be accompanied by elements of language tinged with firmness…
In detail, prices in annualized data in April rose by 4%, against 4.1% expected and 4.9% in March, in the broadest product base. On the other hand, no deviation to report compared to the target for prices, excluding food and energy, in monthly data (+0.4%). The “core” figure, that is to say excluding food and energy prices, stood at 5.3% over one year, again exactly in line with the expectations of economists polled by Wall Street Log.
At the end of the FOMC today, “the decision to pause the rate hike in the United States does not meet with consensus within the Federal Reserve”, underlines Emmanuel Auboyneau, Managing Partner of Amplegest
“On the one hand, the hawks, who are in favor of a more aggressive monetary policy to kill inflation that is still too high. For them, there is no break at this stage as long as the economy is just as resilient and inflation is still too high. other, the doves who consider that the rate shock operated in 2022 must gradually produce its effects.
The ECB will complete a new Board of Governors tomorrow.
To be complete on the statistical front, note the publication of the ZEW index of confidence in the German economy, which has officially entered recession. The index comes out in negative territory (-8.5-, less deeply however than the consensus had predicted. “The ZEW indicator of the economic climate shows a slight improvement, but it remains in negative territory. This means that the experts do not expect the economic situation to improve in the second half of the year.In particular, export-oriented sectors are likely to perform poorly due to the weak global economy.However, the current recession is generally not considered as particularly alarming,” commented ZEW President Professor Achim Wambach.
On the values ​​side, Teleperformance chained a third consecutive session of increases of more than 3% (+3.8%). Saint-Gobain advanced 3.1% after announcing an agreement to buy the company Building Products of Canada, which produces roofing shingles for the residential sector and wood fiber insulation panels, for around 925 million euros. euros. Ubisoft lost 1.7% erasing part of its gains the day before (+3%) after the group held a conference deemed convincing on its next major video game releases.
On the other side of the Atlantic, the main equity indices gained ground on Tuesday, like the Dow Jones (+0.43% to 34,212 points) and especially the Nasdaq Composite (+1.63 % at 13,573 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.69% to 4,369 points.
A point on the other risky asset classes: around 08:00 this morning on the foreign exchange market, the single currency was trading at a level close to $1.0780. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $69.70.
On the macroeconomic agenda this Wednesday, to follow in priority industrial production in the Euro Zone at 11:00 a.m. and the producer price indices in the United States at 2:30 p.m. See you at 8:00 p.m. for the Fed’s monetary policy decision and at 8:30 p.m. for the long-awaited press conference.
KEY GRAPHIC ELEMENTS
Around 7,200 points, after the formation of two doji stars, the CAC is, in timid volumes, in a period of congestion, suggesting a release of energy, that one, the other or both of the main meetings of monetary policy of the week may cause.
FORECAST
In view of the key graphic factors that we have identified, our opinion is neutral on the CAC 40 index in the short term.
We will take care to note that a crossing of 7380.00 points would revive the tension in the purchase. While a break of 7088.00 points would relaunch the selling pressure.
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