The Paris Stock Exchange lost 0.83% on Monday, continuing the decline that began on Friday and caused by the speech by the president of the American central bank who clearly ruled out the hypothesis of a less strict monetary policy.
The star CAC 40 index lost 51.98 points to 6,222.28 points. On Friday, it had lost 1.68%, ending the week with a loss of 3.41%, its worst performance in two months.
Investors had hoped that the world’s most powerful central bank, the US Federal Reserve, would turn around and have a lighter hand on key rate hikes later in the year.
But Friday, its president Jerome Powell showered these hopes by reaffirming that the Fed would “vigorously use its tools” to curb inflation.
Isabel Schnabel, the representative of the European Central Bank at the Jackson Hole (Wyoming) symposium, the annual high mass of central bankers, also took a hard line against inflation, defending the path of “determination” which consists in “react more forcefully to the current surge in inflation, even at the risk of weaker growth and higher unemployment”.
“Isabel Schnabel’s remarks hit the bull’s eye,” said Vincent Juvyns of JPMorgan AM, pointing to the rise of the euro, which briefly rose above parity with the dollar during Monday’s session.
“This convinced the markets that the ECB would at least increase its rates by 50 basis points in September to support the euro”, he adds, adding that he must “come to the bedside of the ‘euro’ at the risk of aggravating inflationary dynamics if the single European currency remains weak against the dollar.
Another notable consequence of the determination shown by the central banks, the interest rate of the 10-year loan of the French State rose sharply to reach 2.12%, returning close to its highest levels of the year. .
The Paris market also remains concerned about the situation on the energy markets and the fall in reference prices for gas and electricity in Europe, after the records reached in recent days, which have not reassured investors. .
For Vincent Juvyns, “we must prepare for the idea of living without Russian gas this winter in Europe”, which poses a considerable risk to economic activity in the fourth quarter of this year.
Prime Minister Elisabeth Borne also urged companies on Monday to quickly reduce their energy consumption so as to avoid “rationing” measures, during a speech to employers.
On a European scale, the European Commission is preparing “an emergency intervention and a structural reform of the electricity market”, the rules of which are called into question in the face of the current surge in prices.
Tensions over superprofits in France
Elisabeth Borne said on Saturday that she would not “close the door” to a taxation of the “super profits” of companies, while preferring that the company which can “lower prices for the consumer and give purchasing power to its employees. “.
Companies linked to communities, such as Engie (-4.33% to 12.20 euros), Veolia (-0.97% to 22.39 euros) suffered on Monday, as did certain companies in the energy and utilities sector. raw materials such as Eramet (-6.53% to 93 euros) or Neoen (-6.26% to 40.40 euros).