(News Bulletin 247) – The Parisian index ended Thursday’s session down 0.5%, held back by the restrictive speeches of the two major central banks.

The Paris Stock Exchange bends but does not yield. The CAC 40 fell by 0.51% on Thursday to 7290.91 points, undermined by the relatively aggressive speeches of the American Federal Reserve (Fed) and the European Central Bank (ECB).

The ECB, as expected by the market, raised all of its three key rates on Thursday by 25 basis points or 0.25%.

“What is more interesting is the message from the ECB, which was unequivocally hawkish (restrictive, editor’s note)”, notes Capital Economics. “The bank said it expects inflation to ‘stay too high for too long’, and now expects core inflation to average 3.0% next year (from 2 .5% previously) and 2.3% in 2025 (against 2.2%)”, underlines the think tank.

The ECB has a long way to go

The tone of its president Christine Lagarde, during her conference, turned out to be much the same. “We have not arrived at the right port,” she said, and “we still have a long way to go” to bring inflation back to 2% within an acceptable horizon, argued the central banker.

Unless there is a “significant” change in its central scenario, the ECB plans “to increase its rates in July”, also indicated Christine Lagarde, estimating “that this probably does not come as a surprise to you (journalists, editor’s note )”.

“The ‘hawkish’ language may not be surprising, but the explicit nature of these comments, when referring to the next meeting, was arguably more so than markets had anticipated,” Craig said. Erlam from Oanda.

Surprise rise in retail sales

For its part, the Fed, as expected by the market, opted for the status quo on its rates on Wednesday evening. But the “dot plot”, that is to say the projections of its members, show that these same members are counting on a level of key rates of 5.6% at the end of the year, against 5.1% in the previous March projections, and a rate currently between 500 and 525 basis points (5% and 5.25%). In other words, rate hikes of around 50 basis points could still be passed by the Fed by the end of the year.

“We can deduce that there is already no longer any doubt about the intention of the Fed to raise its rates again next July. The markets will have to get used to high rates being the norm for a long time. “, judge William Gerlach, regional director France and United Kingdom at iBanFirst.

Fed Chairman Jerome Powell clearly went in this direction during his press conference. The central banker notably indicated that almost all members of the Fed were in favor of further rate hikes.

In the midst of this extensive information on central banks, market operators also had to digest the unexpected increase in retail sales in the United States for the month of May, with an increase of 0.3% over one month against a decline. of 0.2% expected by economists polled by the Wall Street Journal.

Ipsos stands out

As for values, Ipsos posted an increase of 3.7%, the market appreciating the investor day held on Wednesday during which the polls and studies group unveiled its ambitions in generative AI.

In small caps, Balyo jumped more than 50% after announcing that it would be the subject of a friendly takeover bid by Japanese giant Softbank.

For its part, the 3D printing specialist Prodways plunged 22.7% after issuing a heavy profit warning and slashing its outlook for 2023.

On the other markets, the euro was propelled by announcements and comments from the ECB and gained 0.9% against the dollar at 1.0930 dollar. Oil prices are rising sharply. The August contract on North Sea Brent is up 2.5% at $75.02 a barrel, while the July contract on New York-listed WTI is also up 2.6% at $70.04. the barrel.