Cac 40: The Paris Bourse falls heavily before the hearing of Jerome Powell

Cac 40: The Paris Bourse falls heavily before the hearing of Jerome Powell

(BFM Bourse) – The operators do not maintain much hope before the intervention of the head of the Federal Reserve before the American senators. The economy could well find itself in the short term victim of the battle against inflation initiated by the central bank of the United States, as is the case for many of its counterparts now.

A market whose troughs are lower and lower and the rebounds lower and lower: this is the very definition of a downtrend, and the CAC 40 is clearly right in it. Thus, after losing almost 10% in two weeks, the tricolor index only managed a weak rebound on Monday and Tuesday (+0.64% and +0.75%), only to fall back heavily this Wednesday morning. . Around 11:30 a.m., the Paris market barometer returned 1.73% to 5,861.51 points, with operators no longer having any illusions about the tone of Jerome Powell’s speech this afternoon before the US Senate.

The President of the Federal Reserve of the United States should logically reiterate that the priority of the central bank is to break inflation – at the risk of precipitating a recession within a few months.

European dissensions about the attitude to adopt in the face of the invasion of Ukraine by Russia and the way to manage the question of energy supplies are also worrying. “Across Europe, countries are activating emergency energy plans, including reactivating coal-fired power plants. Even the Greens are finally admitting that a clean energy transition is incompatible with the short-term goals of a green economy. war,” said Jeffrey Halley, an analyst at Oanda. If Russian gas imports continue to fall, a recession in Europe could ensue, blowing new headwinds for global growth and giving the ECB some additional stagflation headaches, he added.

Oil plummets

However, the return of American investors to the markets on Tuesday (after a long weekend on the occasion of a new federal holiday, Juneteenth National Independence Day, or Emancipation Day) had been smooth on Tuesday, Wall Street having offered a rebound of 2%. But “Asian stock markets experienced a volatile session this morning during which the optimism seen the day before on Wall Street was no match for the general concerns around the ability of the global economy to stand on its own two feet. in the current context of high inflation and rapidly rising interest rates”, notes Guillaume Dejean of Western Union Business Solutions.

Oil fell sharply by more than 4% (to $109.97 a barrel of Brent and $104.469 a barrel of WTI) due to fears of recessions and as the White House considers measures aimed at containing the rise in prices, such as the suspension of a federal fuel tax.

On the foreign exchange market, the euro slipped 0.16% to 1.0516 dollars.

Alleged price agreement for Rexel, Schneider and Legrand

The context of risk aversion leads an overwhelming majority of CAC values ​​into the red, with only Orange and Worldline managing to float. Cyclicals such as steel, automotive, construction and industry are, on the contrary, among the hardest hit. It should be noted that Carrefour, a player in distribution, does not benefit from its defensive nature due to a downgrade by Bernstein, which went to “underweight” (the share thus lost 4%).

In other news, Rexel (-6.4%), Schneider (-3.3%) and Legrand (-2.9%) are in the crosshairs of French and Swiss judges for an alleged price agreement , coupled with tax evasion for distributors Rexel and Sonepar (unlisted), reports Mediapart.

Crédit Agricole (-1.6%) does not benefit more than its subsidiary Amundi (-1.05%) from the presentation of their respective 2025 strategic plans. The Adocia biotech, sought in the morning after the announcement of the good results of a phase 2 trial (intermediate stage of clinical trials) on a combination of insulin and amylin, two hormones that the liver of people with diabetes type 1 cannot produce, also falls heavily (-5.4%).

Guillaume Bayre – ©2022 BFM Bourse