(News Bulletin 247) – The monetary policy meeting of the American central bank generally reassured the market while the SNB lowered its key rate. The Paris Stock Exchange hardly benefits from these announcements.

After a few rather calm days, this Thursday’s session turns out to be very busy with macroeconomic news. However, the CAC 40 does not benefit from this. The Parisian index even dropped 0.22% at mid-session this Thursday to 8,143.74 points, after setting a new record at 8,229.25 points in the first exchanges.

The American Federal Reserve (Fed) surprised the market Wednesday evening with a more “dovish” (accommodating) tone than expected. In their “dots plots”, that is to say their projections of growth and key rates, the members of the central bank always retain as a central scenario a reduction of 75 basis points (0.75%) in key rates by the end of the year, the equivalent of three cuts of 25 basis points, as in December. This projection is maintained even though growth prospects have been significantly revised upwards by these same members.

“The financial markets showed their relief yesterday after the FOMC (monetary policy committee, editor’s note) meeting because the Fed confirmed that its majority scenario was to relax its monetary policy from this year”, note the Oddo economists BHF.

“During the press conference, Jerome Powell considered that the first rate cut could take place during the very next meetings. According to futures (futures contracts, Editor’s note), the implicit probability of a cut in June which had fallen below 50 % at the end of last week rose to around 70%,” they add.

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The BNS, the first major Western bank to cut rates

The National Bank of Switzerland has opened the door to rate cuts by major Western central banks. If some economists had counted on such a movement, the consensus rather held the month of June for a first cut.

The Swiss institution has decided to reduce its main rate by 25 basis points to 1.5%. “With the Bank becoming more accommodating and inflation likely to be lower than forecast, we continue to forecast two further rate cuts this year,” writes Capital Economics.

And in the midst of these announcements, the PMI indices, leading indicators of private sector activity, were published in the euro zone this Thursday morning. “In March, the closely watched Eurozone composite PMI came in slightly better than expected at 49.9, compared with 49.2 in February, leaving the first quarter average at 49,” summarizes Clemente de Lucia, economist at Deutsche Bank.

Going against this overall trend, the composite PMI index for France fell slightly in March to 47.7 compared to 48.1 the previous month. “The first quarter of 2024 will not be that of recovery for the French economy,” underlines Norman Liebke of the Hamburg Commercal Bank, which designs this data alongside S&P Global.

Auto equipment manufacturers in good shape

Moreover, the CAC 40 underperforms the other European indices which are all quite clearly in the green at midday.

On the value side, Forvia gained 3.8%, benefiting from an increase in the purchase recommendation from UBS, leading in its wake Valeo (+3%), another major automotive supplier in the Paris market. .

Remy Cointreau (+2.4%) is for its part supported by Deutsche Bank which went from “hold” to “buy” on the stock. The bank also went from “sell” to “hold” on Pernod Ricard which gained 1%.

In other markets, the euro is stable against the dollar. Note that the Swiss franc plunged 0.7% against the dollar after the BNS decision. Oil is falling. The May contract on North Sea Brent lost 0.2% against $85.79 per barrel while that of the same maturity on WTI listed in New York lost 0.2% to $81.11 per barrel.