CAC 40: The Fed does not surprise and the results are raining down
The Palais Brongniart, former headquarters of the Paris Stock Exchange. (Image credit: / L. Grassin)
(CercleFinance.com) – The Paris Stock Exchange is expected to rise Thursday morning, following Wall Street’s rise the day before, following a 75 basis point hike in Fed interest rates that did not appear to have destabilized the market.
At around 8:15 am, the ‘futures’ contract on the CAC 40 index – August delivery – rose 45.5 points to 6302.5 points, signaling a gain of around 0.7% at the open.
In a statement released last night after its two-day monetary policy meeting, the Federal Reserve announced its intention to raise interest rates for the fourth straight month.
The central bank also hinted that it could decide on more by the end of the year depending on upcoming economic data.
‘Your CEO Jerome Powell has made it clear that fighting inflation remains a priority, even at the expense of a possible entry into a recession,’ underline the analysts at Commerzbank.
However, the central authority’s announcements were broadly in line with market expectations, prompting investors to pay increased attention to the language being used in relation to the recent slowdown in economic growth.
As a result, many economists expect the Fed to act more cautiously as monetary policy tightens.
“The subtle changes in the FOMC statement, as well as President Powell’s comments during the press conference, reinforce our expectation that the Fed will hike rates at a less aggressive pace through September,” Lombard Odier’s teams affirm.
The Swiss private bank says it plans another 50 basis point hike at the end of September’s meeting, followed by 25 basis point hikes at subsequent meetings.
The New York Stock Exchange was also able to close largely positively after the announcements by the Federal Reserve with a plus of 1.4% and the Nasdaq Composite of 4.1%.
Aside from the unsurprising decisions by the Fed, it’s the plethora of corporate results that will constitute the main news of today’s session.
On the front pages of the quarterly publications, the stakeholders are preparing for a particularly busy day. Many European heavyweights of the caliber of ArcelorMittal, Nestlé, Sanofi, Stellantis and Volkswagen have already presented their results early in the morning.
The session also promises to be very rich in terms of economic indicators, particularly the latest inflation figures in Germany, which are expected to remain nearly stable at very high historical levels.
Market participants will also be interested in the first estimate of US second quarter GDP, which is expected to rise 0.5% after falling 1.6% in the first quarter.