Cac 40 stopped in its tracks, Jerome Powell awaited possible Fed change, Sunday news

The Paris Stock Exchange nearly erased its early gains, hampered by a continued contraction in manufacturing activity in the eurozone. The PMI index, calculated by S&P Global, fell 2 points to 46.4 in October, the lowest level since May 2020, signaling a fourth straight month of economic contraction.

Caution is also required as the Fed’s monetary decision, scheduled for 7 p.m., approaches. Observers are hoping for a fourth consecutive increase in the Fed Funds rate of 75 basis points, but the market is largely awaiting a press conference by Jerome Powell, which should signal an upcoming adjustment in the pace of further rate hikes.

Around 10:30 am Bedroom 40 was almost flat at 6,332.84 points (+0.07%) on a business volume of around 400 million euros.

Investors are waiting for Jerome Powell to signal at his post-FOMC press conference that further tightening will be scaled back and a return to more “standard” hikes starting in December. John Velis, macro and forex strategist at BNY Mellon, sees the prospect of a moderation in the scale of further rate hikes as “acceptable”. ” First, we heard it from President Powell himself at the last two post-FOMC press conferences, as well as from key officials before the blackout ten days ago.

There is nothing new in the Fed’s speech

In both cases, more or less the same language was used. In opening remarks at a July news conference, Powell said that “a slowdown in growth will probably be appropriate as we assess how the cumulative effect of monetary adjustments affects the economy and inflation.” This was repeated almost verbatim at the September press conference.

Second, the simple calculation of our long-consensus final rate, which is expected to peak at 5% in March 2023, implies the Fed’s target rate (at the upper end) after Wednesday’s 75 basis point hike. At 4%, that would still leave 100 basis points to reach the final rate. We believe there will be two meetings at 50 basis points (in December and February) and then a break “. So a ‘pivot’ or tilt in Fed policy?” We believe that this is a more normal development in a period of monetary tightening “, the strategist defines.

Jerome Powell on eggs

We believe that Chairman Powell will redouble his efforts to avoid saying anything that could be interpreted as a sign that the imminent reduction in the rate hikes is a transition toward the end of a period of monetary tightening. The question remains more open because the Fed will have two new statistics on inflation and employment, including one scheduled for Friday, before its December meeting, Kevin Cummins, chief economist at NatWest Markets, was quoted as saying by Reuters.

Meanwhile, markets will be watching the ADP survey of US private employment in October, as well as the non-manufacturing PMI across the Atlantic.

TotalEnergies and luxury are covered

Despite rumors of a zero-Covid policy being denied by Chinese authorities, luxury stocks are under wraps, especially as the Zhengzhou economic zone is under lockdown.. LVMH, Hermes and Kering Earn between 0.7% and 1.1%.

TotalEnergies U.S. weekly crude oil inventories would have fallen by 6.5 million barrels last week, according to the American Petroleum Institute, a trade association, while oil prices rose 0.6%.

Sodexo It loses 2.5%. The collective catering group announced that it is targeting organic growth of between 6% and 8% of its turnover for the 2024 and 2025 financial years and a margin of more than 6% in 2025. Predictions for 2023. 8% to 10% organic revenue growth.

Imerys It decreased by 5.9%. The industrial minerals producer confirmed its profitability targets for 2022 after posting organic growth of 13.3% in the third quarter and 14% in the first nine months of the year.

Leave a Reply

Your email address will not be published. Required fields are marked *