Posted Apr 14, 2023, 8:37 AM
Anticipation of an imminent end to the US Federal Reserve’s rate hike cycle boosted Wall Street on Thursday, leading Asian markets this morning. The Paris Stock Exchange, which has chained records this week, should follow, with nevertheless an eye on the quarterly turnover of Hermès while awaiting the first results of the major American banks this afternoon.
In New York, the S&P 500 closed up 1.3%, its best performance this month, while, with a gain of nearly 2%, the Nasdaq Composte posted its strongest gain since mid- March. The 0.5% drop in US producer prices last month and the first rise in weekly jobless claims in three weeks reinforced the scenario of an upcoming pause in Fed monetary tightening.
A Fed shift is possible, but…
The market is pricing about a 66% chance of a 25 basis point rate hike in the 5% to 5.25% range on May 3, which would be the last, according to CME Group’s FedWatch tool. The possibility of an easing from July is also envisaged with the Fed funds rate at 4.25%-4.5% towards the end of the year. The expected decline in retail sales in March could support this hypothesis.
A shift in Fed policy is possible, “ but with the labor market continuing to hold up relatively well, it’s hard to imagine the Fed rushing to cut rates as the US economy remains relatively strong on the jobs front “, nuance Michael Hewson, chief market analyst at CMC Markets.
This renewed enthusiasm for central banks is also fueled by the surprise decision of the central bank of Singapore to opt for the status quo after five tightenings in a row. It thus joins the central banks of Canada, Australia and South Korea, which have already observed a pause. By contrast, the European Central Bank could opt for a further 50 basis point hike in its key rates on May 4, with no prospect of easing this year.
JPMorgan opens the quarterly ball
Joachim Nagel, President of the Bundesbank and member of the Governing Council of the ECB said yesterday that the underlying inflation rate should start to improve in the coming months, while recalling that the ECB still has some way to go to go in terms of monetary policy. On the foreign exchange market, the euro touched a new high of one year at 1.1075 dollar in Asia this morning.
The market will watch this afternoon the results of the first quarter of JPMorgan Chase, member of the Dow Jones, Citigroup, Wells Fargo, and health insurer UnitedHealth, also present in the index of 30 industrials.
Hermes reported first-quarter revenue of .3.38 billion euros, up 23% at constant exchange rates. The luxury saddler evokes a particularly dynamic activity in all geographical areas and in all trades. HSBC analysts on average expected in a note sales growth of 17.5% year-on-year for the period.
Vivendi. Canal+, a subsidiary of the media group, has announced the signing of a strategic partnership with the Apple TV+ streaming service. Under this agreement, Canal+ will offer all Apple TV+ content to its subscribers. Access to the service will be Free to current subscribers and will be included in the subscription offers offered for subscription, the group said. Canal+ will also broadcast Apple Original series on its channel.
Vinci indicated that passenger traffic at its airports had increased by 54.3% in the first quarter of 2023, compared to the same period last year, thanks in particular to all-time attendance records in Portugal, Serbia and Mexico.
Among analyst ratings, Deutsche Bank downgraded Alstom from “buy” to “hold” while maintaining its price target at 30 euros.
