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While the Paris Bourse enjoyed a remarkable rise last week, the trend has completely reversed. Like the European stock markets, the CAC 40 has been on the decline since Monday. And today is no exception, particularly after the central banks’ monetary policy announcements.
A complicated week for the Paris Bourse. It fell again on Friday, following a series of central bank announcements over the past few days, and awaiting further economic indicators. Last week, the CAC 40 had posted its best weekly performance since mid-April. But some observers wondered whether this rebound was excessive, given the uncertainties surrounding the Fed’s monetary policy and the strength of China’s recovery.
The main index, the CAC 40, lost 38.51 points today to reach 7,165.44 at around 10 a.m., following a 57.69-point drop the previous day. The Paris Bourse is gearing up for its most difficult week since mid-March, when it reached 6,925.40 points.
Having assimilated the monetary decisions of the world’s central banks, investors are now focusing on PMI indicators in France, Germany, the eurozone and the United States.
In France, economic activity in June saw “its sharpest contraction” in 28 months, mainly due to a downturn in services and a continued decline in manufacturing, according to the provisional PMI index published Friday by S&P Global.
The Flash composite index, which measures private sector activity, reached 47.3 in June, down slightly from a revised value of 51.2 in May, reaching its lowest level since February 2021. A value above 50 indicates expansion, while a value below this threshold indicates contraction.
In the Eurozone, the PMI indicator revealed a “very strong” slowdown in growth in June.
Central bank statements
Among the central banks that took a stance this week on their future monetary policy, US Federal Reserve (Fed) Chairman Jerome Powell warned a congressional committee that the institution planned to raise interest rates again. Powell gave his semi-annual monetary policy address to the House of Representatives and the Senate on Wednesday and Thursday respectively.
For his part, Joachim Nagel, President of the German Federal Bank, felt that the European Central Bank’s key rate was not yet “high enough”.
The big surprise in Europe came from the Central Bank of England (BoE), which raised its key rate by 50 basis points, whereas analysts were expecting a 25-point increase.
Thus, central banks continue to “tighten monetary policy to cope with inflationary pressures”, concludes Sebastian Paris Horvitz of LBP AM.
China’s central bank, for its part, is expected to reduce the rate of its preferential medium-term loans in order to revitalize certain sectors. For the time being, however, the authorities have yet to unveil any other specific measures to support the economy, saying only that they will be presented “when the time comes”. Goldman Sachs, which expects the measures to be less far-reaching than previously anticipated, has revised its forecast for Chinese economic growth downwards to 5.4% this year, from 6% previously, and from 4.6% to 4.5% for 2024. Sensitive to the Chinese economy, luxury goods and large cyclicals declined. LVMH and Kering lost 0.77% and 1.25% respectively.
Read also >European stock markets breathe a sigh of relief thanks to US debt suspension
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While the Paris Bourse enjoyed a remarkable rise last week, the trend has completely reversed. Like the European stock markets, the CAC 40 has been on the decline since Monday. And today is no exception, particularly after the central banks’ monetary policy announcements.
A complicated week for the Paris Bourse. It fell again on Friday, following a series of central bank announcements over the past few days, and awaiting further economic indicators. Last week, the CAC 40 had posted its best weekly performance since mid-April. But some observers wondered whether this rebound was excessive, given the uncertainties surrounding the Fed’s monetary policy and the strength of China’s recovery.
The main index, the CAC 40, lost 38.51 points today to reach 7,165.44 at around 10 a.m., following a 57.69-point drop the previous day. The Paris Bourse is gearing up for its most difficult week since mid-March, when it reached 6,925.40 points.
Having assimilated the monetary decisions of the world’s central banks, investors are now focusing on PMI indicators in France, Germany, the eurozone and the United States.
In France, economic activity in June saw “its sharpest contraction” in 28 months, mainly due to a downturn in services and a continued decline in manufacturing, according to the provisional PMI index published Friday by S&P Global.
The Flash composite index, which measures private sector activity, reached 47.3 in June, down slightly from a revised value of 51.2 in May, reaching its lowest level since February 2021. A value above 50 indicates expansion, while a value below this threshold indicates contraction.
In the Eurozone, the PMI indicator revealed a “very strong” slowdown in growth in June.
Central bank statements
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While the Paris Bourse enjoyed a remarkable rise last week, the trend has completely reversed. Like the European stock markets, the CAC 40 has been on the decline since Monday. And today is no exception, particularly after the central banks’ monetary policy announcements.
A complicated week for the Paris Bourse. It fell again on Friday, following a series of central bank announcements over the past few days, and awaiting further economic indicators. Last week, the CAC 40 had posted its best weekly performance since mid-April. But some observers wondered whether this rebound was excessive, given the uncertainties surrounding the Fed’s monetary policy and the strength of China’s recovery.
The main index, the CAC 40, lost 38.51 points today to reach 7,165.44 at around 10 a.m., following a 57.69-point drop the previous day. The Paris Bourse is gearing up for its most difficult week since mid-March, when it reached 6,925.40 points.
Having assimilated the monetary decisions of the world’s central banks, investors are now focusing on PMI indicators in France, Germany, the eurozone and the United States.
In France, economic activity in June saw “its sharpest contraction” in 28 months, mainly due to a downturn in services and a continued decline in manufacturing, according to the provisional PMI index published Friday by S&P Global.
The Flash composite index, which measures private sector activity, reached 47.3 in June, down slightly from a revised value of 51.2 in May, reaching its lowest level since February 2021. A value above 50 indicates expansion, while a value below this threshold indicates contraction.
In the Eurozone, the PMI indicator revealed a “very strong” slowdown in growth in June.
Central bank statements
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