Stock market: CAC 40 down slightly after Fed status quo

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This morning, Thursday, June 13, the Paris Stock Exchange lost 0.5%. In Europe, as in Asia, stock indexes are falling after the decision by the Federal Reserve System (Fed) to cut interest rates less than expected this year.

In Asia as well as in Europe, stock indices are falling this Thursday, June 13, after the decision of the Federal Reserve System (Fed) reduce interest rates less this year despite slowing inflation in the United States. Chinese stock markets opened higher, following Wall Street records the previous day, before reversing. Shanghai lost 0.28% and Shenzhen lost 0.69% in recent trading. Only Hong Kong (+0.76%) remained in the green. Tokyo fell 0.40% on jitters ahead of the Bank of Japan’s (BoJ) monetary policy meeting on Friday.

On the old continent, the Paris Stock Exchange (CAC 40) lost around 7:30 GMT 0.36%, Frankfurt 0.33% and London 0.17%. On Wednesday night, the Fed unsurprisingly announced it would leave its key rates unchanged, in the range of 5.25% to 5.50% where they have been since last July, the highest level in more than 20 years. “However, not all investors’ eyes were on keeping rates steady, but rather on new forecasts.” rate cuts, comments John Plassard, investment specialist for Mirabaud.

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Just one rate cut

Members of the Federal Reserve’s Monetary Committee (FOMC) now expect just one rate cut this year, compared with three previously. All these notifications “no doubt the markets would be particularly badly received if the inflation news”published hours before the Fed’s announcement, “didn’t highlight a clear improvement regarding the price increase”comment economists from Riches Flores Research.

The CPI revealed inflation at 3.3% year-on-year in May, up from 3.4% in April. So-called core inflation, which excludes volatile food and energy data, also came in more favorably than expected at 0.2% for the month versus 0.3% in April and 3.4% versus 3.7% for one year . John Plassard points out that the Fed revised its “Inflation Estimates for 2024, 2025 and 2026”which could guide investors “profit-taking on indices (highs) in coming days”.

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‚ÄúSince the committee’s last statement (May 1st), stocks and bonds have outperformed (previously hit record highs), gold is steady and the dollar is down slightly., explains. In the bond market around 7:30 GMT, the yield on two-year US government bonds, the most sensitive to changes in the Fed’s monetary policy, was at 4.76%, up from 4.75% the day before the close. Ten-year rates remained steady at 4.32%.

In Europe, the auto sector continued to move in the negative on Thursday after Brussels announced up to 38% additional tariffs on imports of Chinese electric vehicles into the EU the day before. Germany, heavily involved in China, fought with Sweden and Hungary to avoid sanctions, fearing retaliation. France and Spain, on the other hand, promoted targeted and proportionate measures.

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Volkswagen, the leading European car concern, lost 1.64% on the Frankfurt Stock Exchange. Mercedes fell 0.96% and BMW 1.64%. For the three German groups, the main national market is China, which represents up to 36% of the sales volume. In Paris, Renault fell 1.26% and Stellantis lost 1.45%.

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Oil down

Oil prices are falling, further penalized by an unexpected jump in US stocks in a report a day earlier, as well as a dovish tone from the Fed, still worried about inflation. Brent crude for August delivery was down 0.34% at $82.32 a barrel by 7:25 GMT. U.S. West Texas Intermediate (WTI) crude, due in July, fell 0.33% to $78.24 a barrel. In the foreign exchange market, the dollar was steady against the euro (-0.01%) at $1.0809 per euro. Bitcoin lost 0.65% to $67,641.

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