(News Bulletin 247) – The Parisian index ended the session on Thursday, December 19, down 1.2%. Semiconductors suffered while Capgemini tread water.

A session to forget for the CAC 40. The Parisian index fell below 7,300 points this Thursday, December 19, falling 1.22% to 7,294.37 points.

The French market suffered from announcements from the American Federal Reserve (Fed). On Wednesday evening, the Fed lowered its key rates by a quarter of a percentage point, as expected. But the economic and monetary projections (“dots plots”) of the various members of the American central bank have scolded investors.

This document, which is published quarterly and is not strictly speaking a forecast, shows that the median expectation of Fed members for 2025 incorporates only 50 basis points (0.5 percentage points) of cuts key rates.

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A brake in 2025?

However, in the previous “dots plots”, in September, members anticipated a rate cut of 100 basis points over 2025. In addition, Fed members revised their inflation projections upwards, counting in particular on a 2.5% increase in the PCE index (an alternative measure of inflation), compared to 2.1% previously.

Fed Chairman Jerome Powell also warned that future rate cuts would not be self-evident.

“Jerome Powell warned that due to the recent slowdown in progress on inflation and increased uncertainty related to fiscal and trade policies under the new administration, a more cautious approach to possible further reductions is required,” underlines Tiffany Wilding, economist at Pimco.

For Goldman Sachs, the Fed has clearly signaled “its intention to slow the pace of rate cuts next year”.

Capgemini biggest rise in CAC 40

This restrictive turn by the Fed penalized the vast majority of stocks. Most CAC 40 stocks suffered, with 35 finishing in the red.

STMicroelectronics dropped 6.2%, showing the biggest decline in the Parisian index. Soitec, another semiconductor group, also suffered, losing 6.8%.

The two companies were penalized by the disappointing prospects of their American peer Micron, which plunged 15.6% on Wall Street.

Capgemini posted the biggest increase, gaining 1.6%. The digital services company was buoyed by the good results of its peer Accenture, which raised its growth target for its entire 2024-2025 financial year.

On other markets, the euro gained 0.25% against the dollar, to 1.0381 dollars. But the euro zone currency had fallen by more than 1% on Wednesday evening after the Fed’s announcements, falling below $1.04 for the first time since the end of 2022.

Oil is falling a little. The February contract on North Sea Brent lost 0.8% to $72.81 per barrel while that of the same maturity on WTI listed in New York lost 0.6% to $70.17 per barrel.