CAC40: in the red following Fed statement

(CercleFinance.com) - The Paris Bourse was down 0.
9% this morning, at around 7910 points, penalized by Stellantis (-3.8%) and TotalEnergies (-2.6%), far from Teleperformance's surge of over 10%.

Closed yesterday for the May 1st vacation, the Paris Bourse is trading in a cautious market in the wake of a Fed statement that cast doubt on the timing of its next rate cuts.

Last night, the Federal Reserve's Monetary Policy Committee (FOMC) unanimously decided to keep its key rates unchanged.

The Fed notes that growth remains 'solid', job creation and consumption remain robust, while inflation has stopped falling for several months now.

'The inflation problem may not be easy to solve if the economy continues to do well', admit Commerzbank analysts.

For the German bank, no interest rate cut is therefore to be expected before December.

Other strategists, on the contrary, are talking about a "slightly dovish" FOMC, i.e. accommodative, with Jerome Powell, the institution's Chairman, having made it clear that the next rate move is unlikely to be a hike.

Admittedly, disinflation came to a halt in the first quarter, but this is by no means enough to envisage a 'pivot within the pivot', i.e. a return to a rate hike scenario", says Bastien Drut, head of strategy and economic research at CPRAM.

The bias remains towards lower rates, even if Powell has deliberately remained very vague about the timing, given the uncertainty surrounding inflation", he stresses.

The uncertainty surrounding the Fed's monetary easing agenda is not preventing US bond yields from beginning to ease.

The rate on 10-year US Treasuries is hovering around 4.61%, compared with a peak of almost 4.70% last night following the Fed's announcements.

'Overall, the prevailing market sentiment remains that the Fed will start cutting rates by the end of the third quarter', says Mahmoud Alkudsi, market analyst at ADSS, a Dubai-based brokerage firm.

On the statistics front, the HCOB PMI index for eurozone manufacturing settled below the 50 mark of no change between contraction and growth for the 22nd consecutive month, signalling a further deterioration in economic conditions in April.


Having fallen from 46.1 in March to 45.7, it also highlights a slight acceleration in the contraction of the eurozone manufacturing sector compared to the previous month, with strong divergences in trends at national level.

In France, the PMI manufacturing index fell from 46.2 in March to 45.3 in April, marking the fifteenth consecutive deterioration in the sector's economic situation, with the contraction recording its fastest pace since January.

Finally, in the news for French companies, Worldline reported first-quarter 2024 sales of just under 1.1 billion euros, up 2.5% organically, with a 3.9% increase in merchant services more than offsetting a 1.4% decline in financial services.

Technip Energies reported EPS for the first three months of 2024 (adjusted) up 11% to 0.50 euros, but a recurring EBIT margin down 0.3 points to 7.3% on sales up 8% to 1.52 billion euros.

For the first three months of the year, ArcelorMittal posted earnings before interest, taxes, depreciation and amortization (Ebitda) - the indicator most closely followed by investors - of $1.96 billion, up 34% on the previous quarter.

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