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Paris (AFP) – The Paris Stock Exchange was heavily heckled Thursday by the much more aggressive tone than expected from the European Central Bank, which prepared the ground for future rate hikes in order to fight once morest persistent inflation.
The star CAC 40 index fell by 3.09%, or 208.02 points to end at 6,522.77 points. This is the biggest decline since March 4, and the index falls to its lowest closing level since November 9.
Down in the morning, following the conclusions of the monetary policy meeting of the American Federal Reserve, the Parisian rating stalled with the measures announced by the European Central Bank then the press conference of its president Christine Lagarde.
“We still have a long way to go”, “we must go further”, “we are in a long game”: Ms. Lagarde multiplied the formulas to convey the message of firmness from the ECB which raised its key rates by 0.50 percentage point following a 0.75 percentage point increase in the previous two meetings.
Investors now expect “a further increase of 0.5 percentage point at the next two meetings”, deciphers Nicolas Leprince, manager of Edmond de Rothschild AM.
The Frankfurt institution has raised its inflation forecasts for the coming years and does not expect to reach its 2% target, even in 2025.
The ECB also kicked off the reduction of its balance sheet, inflated by years of massive debt purchases to support the economy during periods of crisis.
Interest rates on sovereign debt have soared: the French 10-year loan is remunerated at 2.58% once morest 2.42% on Wednesday. The increase is even more spectacular for Italy (4.13%, once morest 3.85% the day before).
This is not the only bad news that investors have suffered: economic data in China or the United States have been below expectations, highlighting the risk of a recession.
In France, the economy is expected to plunge into the red in the fourth quarter before rebounding slightly in 2023, escaping recession despite the energy crisis which will continue to push inflation to a peak of 7% year on year, estimated INSEE on Thursday. The institute also revised its growth forecast for the whole of 2022 down slightly, to 2.5% (compared to 2.6% previously).
Luxury grimaces
The fall in household consumption in China has weighed on luxury stocks, a heavyweight on the Parisian coast. Kering fell 5.57% to 495.50 euros, Hermès by 5.01% to 1,499 euros and LVMH by 3.55% to 701.60 euros.
crossroads faces
Three values of the CAC 40 progressed and only one significantly: Carrefour which took 1.35% to 15.82 euros, but the group had fallen sharply on Wednesday following a negative analyst rating.
Other defensive stocks also did well, such as Thales (+0.04% to 119.70 euros) and Orange (+0.02% to 9.27 euros).
© 2022 AFP
