The Paris Bourse whipped, it had to face a new drop in the Nasdaq Composite in the first exchanges, but it held on! After three declines in a row, and in particular a drop of 2.21% on Wednesday, the Cac 40 managed to rebound in this last session of the week, by 1.34%, not without having gained more than 1.8% in the best of the morning. At 6,548.22 points, it nevertheless posted a weekly decline of 2.04%.
In New York, operators remain worried about the surge in bond yields, which point to 2.7% this Friday for 10-year paper (it was 2.38% at the end of last week and 1.63% at the end of 2021), which weighs on technology and growth stocks, as well as, indirectly in Paris, on Dassault Systems (-3.6%), Worldline (-2.8%) or even STMicroelectronics (-0.6%).
The Fed was too optimistic
” The expected rapid rate hike cycle indicates that, in retrospect, the Fed’s (and most economists’) ‘transitional inflation’ scenario was too optimistic, the central bank must now aggressively catch up after taking delay on the curve “Wrote in a note Maneesh Deshpande, director of US equity strategy at Barclays. As part of the minutes unveiled Wednesday evening, the Federal Reserve indicated that it would reduce its balance sheet by 95 billion dollars per month and that increases of more than 25 basis points are envisaged to curb inflation.
Traders are also awaiting the start of the quarterly earnings season, which kicks off next week with releases from five major banks: JPMorgan on Wednesday, Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo on Thursday.
First round Sunday in France
In France, attention is also focused on the first round of the presidential election which takes place this Sunday. Emmanuel Macron and Marine Le Pen would come first in this vote for which they are credited with 26% and 22% of voting intentions respectively, according to the Opinon Way – Kéa Partners barometer for The echoes and Radio Classique. The narrowing of the gap between the two candidates has weighed in recent days due to the pro-Putin and anti-European positions of Marine Le Pen. ” We expect Macron to be re-elected with a narrow lead over Le Pensays Lale Akoner, market strategist at BNY Mellon Investment Management. A victory for Macron would be welcomed by the markets, which would mark the reduction of political uncertainty and the renewal of a pro-business government. “, she adds.
However, ” while the prospect of an exit from the euro zone seems more distant than during the 2017 campaign, the possibility of seeing Marine Le Pen come to power still constitutes a major risk for the financial markets “, notes for his part Jonas Goltermann, of Capital Economics. He further points out that ” the recent poll crunch in favor of far-right candidate Marine Le Pen ahead of the French presidential election is beginning to affect financial markets “.
Alstom and Sodexo at the top
Biggest increase in the Cac 40, Alstom rose 5.4%. The title of the railway equipment supplier is among Citi’s “top picks”. While the broker is cautious about the outlook for the European electrical equipment sector, it favors energy transition and automation. Citi is also buying Rexel (+3.6%).
Sodexo also took 5.4%, supported by a note from RBC, which went from “online performance” to “outperformance” on the title of the collective catering group. The analyst author of the note considers that the discount of the action compared to its competitors is exaggerated insofar as its business model should allow it to resist better than average to a more uncertain environment and potentially in the grip of stagflation.