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Always an event for the market, the Fed’s FOMC ended yesterday (after the Paris market), without surprise after the publication of inflation the day before, with a status quo on key rates, which remain included in a band between 5 and 5.25%. On the other hand, the tone will have been firm, even particularly firm at the press conference. It should be noted, to summarize, that the monetary institution headed by J Powell foresees two more increases of 25 bp in 2023, raises its underlying inflation forecasts (core), by postponing the idea of a first rate cut indefinitely.
Recall the consumer price indices published on Tuesday. 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.
“In the United States, the inflation figures for the month of May supported the idea that the Fed should take a break in its monetary policy tightening campaign. Indeed, the statistics confirmed the continuation of the deceleration inflation, even if beyond the significant contribution of energy to the fall in inflation, so-called core inflation is slowing down slowly”, noted Sebastian Paris Horvitz, of La Banque Postale Asset Management, in a note preceding the FOMC.
The CAC40, expected to fall this morning, closed Wednesday up 0.52% to 7,328 points, in solid volumes.
After the Fed, it’s the ECB’s turn this Thursday to complete a meeting of its Board of Governors.
“Unsurprisingly, the European Central Bank (ECB) should raise its key rates by 25 basis points on Thursday June 15, on the occasion of the monthly meeting of the Governing Council”, anticipates Julien Russo, senior portfolio manager, Markets money markets, at Swiss Life Asset Managers France.
“A 25 basis point increase in key rates is also expected at the next meeting, scheduled for July 27. At the end of July, the deposit rate should therefore stand at 3.75%. At this stage, it is for the September meeting that the uncertainty is greater. The ECB, which is abandoning its policy of “forward guidance” to the detriment of a policy more dependent on macroeconomic data, should change its discourse meeting after meeting. However, we believe that this movement interest rate hikes could stop at the end of July, but we do not anticipate a rate cut by the end of the year,” continues Mr Russo.
In terms of statistics, industrial production in the Euro Zone was rather pleasantly surprised, rising by 1.0% month on month, against a target of 0.8%. On the other side of the Atlantic, operators took note of the producer price indices, another index, admittedly less direct, of inflation. Excluding food and energy, the index shows a monthly increase of 0.2%, in line with expectations.
On the value side, Casino jumped 21% after the Niel-Pigasse-Zouari trio offered the group a recapitalization of up to 1.1 billion euros, the same amount as the man’s offer. Czech businessman Daniel Kretinsky. Orpea gained 18.6% without any particular announcement seeming to justify this increase. “It has become a retail value”, that is to say taken from small holders, nevertheless recalls an analyst. The renewed appetite for risk is benefiting cyclical stocks, notably Renault, which gained 3.9%, or ArcelorMittal, which gained 1.7%.
On the other side of the Atlantic, the main equity indices ended Wednesday’s session in scattered order, like the Dow Jones (-0.68% to 33,979 points) or the Nasdaq Composite (+0 .39% at 13,626 points). The S&P 500, the reference barometer of risk appetite in the eyes of fund managers, was virtually stationary at the close (+0.08% to 4,372 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 $1.0820. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $68.60.
On the macroeconomic agenda this Thursday, to follow in priority the monetary policy decision of the ECB at 2:15 p.m. and the press conference of the institution at 2:45 p.m. Across the Atlantic to follow at 2:30 p.m. the Empire State manufacturing index, retail sales and weekly unemployment benefit registrations. To follow at 3:15 p.m. the monthly federal report on industry.
KEY GRAPHIC ELEMENTS
While the attraction effect of the gap of May 24 (its remainder, in reality) was felt, the CAC came to fail almost exactly on its lower limit before falling back before the close. An open close to the core of Wednesday’s candle body is expected, with little movement ahead of ECB comments midday.
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 7400.00 points would revive the tension in the purchase. While a break of 7088.00 points would relaunch the selling pressure.
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