Three thresholds pressed in one session, 1 of themuh March… Bedroom 40 It was a black day on Tuesday. On Wednesday, he regained his positions, but not enough to compensate for the losses of the previous days. The flagship index of the Paris Stock Exchange rose by 1.59% to 6,498.02 points, with a volume of transactions of 7.24 billion euros.
He had the support of heavyweights Total Energy (+8.17%), which, like Shell, BP or ExxonMobil, was driven by rising oil prices. A barrel of North Sea Brent oil rose to $113.94, the highest level since June 2014, while the price of a barrel of Texas WTI oil, a benchmark for the US market, rose to $112.51. The decision of the International Energy Agency (IEA) to use 60 million barrels of its strategic reserves to stop the upward spiral had no effect. OPEC+ chose to ignore the crisis and the calls of large importers to speed up the pumping. As expected, the Organization of the Petroleum Exporting Countries and its allies, including Russia, decided to stick to a limited April production increase of 400,000 bpd. ” Brent is the main factor of concern for stock markets », says Maarten Gerdinck, head of European investment at NN Partners. ” If growth becomes “ballistic” and a barrel hits $150 or higher, it will affect growth. “, he warns.
Not only oil, but also natural gas is on fire. Prices hit a new all-time high of €194,715 per megawatt hour (MWh) in Amsterdam as UK gas approaches its December record. Iron ore prices jumped about 10% in three days, which is an element of support for ArcelorMittal (+2.96%).
The Fed will have to be quicker
On earth, the war continues. Kharkiv, the second in Ukraine, located in the east of the country, was bombed on the night of Tuesday to Wednesday, and Russian airborne troops landed on the move. Almost 836,000 refugees have left Ukraine since the offensive began on February 24, according to the UN. Kyiv says it is ready to resume negotiations with Russia. Will the conflict and the resulting additional inflation lead to a revision by the US Federal Reserve (Fed) of its normalization strategy? In his address to the House of Representatives, Fed Chairman Jerome Powell gave little clear guidance on the course of interest rates, suggesting that as Russia’s attacks in Ukraine are destroying markets and creating additional uncertainty, he preferred to leave all options on the table. The Fed will have to show dexterity “, he insisted.
” True, he repeated this with “with inflation well above 2% and a strong labor market, we see fit to raise the target range for the federal funds rate at our meeting later this month”but he didn’t envision the Fed starting its tightening cycle with a sharp 50 basis point hike, and disagreed with his colleagues Bullard and Waller, who advocate a 100 basis point cumulative hike at the next meetings. “, – deciphers Paul Ashworth, chief economist at Capital Economics for the United States. After the invasion of Ukraine, market expectations for rates dropped, but have not changed since. Experts still expect five key rate increases of 25 basis points each this year, followed by two additional hikes in 2023, bringing the rate federal funds up 1.8% at the end of 2023
Better oriented banks
With a sharp rise in crude oil prices, consumer price growth will remain significant, and this is longer than expected. In the eurozone, inflation also reached a new record high of 5.8% for the year in February, beating the previous 5.1% in January.
In the bond market, the yield on 10-year US bonds fell 7 basis points to 1.7949%, while the yield on German bonds with the same maturity fluctuated around 0% versus -0.0645% yesterday evening. This upward movement is beneficial for banks. BNP Paribas rose 2.10% after lowering at the open, while Agricultural loan recovered 1.51%. More feverish, title Societe Generale in the end amounted to 0.26%.
Pressure from the French state on companies present in Russia has intensified Danone (-1.75%) and Alstom (-1.12%). Renault, whose second market is Russia, rebounded 1.46% after falling 17% in two days. Finally, Schneider Electric added 3.47% due to the growth of the opinion of HSBC, which switched from “hold” to “buy”.
In addition to the flagship index, Albioma (-14.88%), Vilmorin (-13.83%) and biomerier (-8.68%) fell after the presentation of results for 2021 and forecast for 2022.