The Cac 40 is falling again, losing nearly 4% since the start of the week.

A new bamboo blow on the financial markets. The flagship Cac 40 index fell 1.99% for the third time this week, returning to 7,708.02 points, the lowest level since February 14. All this in a transaction volume of 4.26 billion euros. The barometer has now lost 3.67% since the start of the week and is only up 2.19% since January 1st. It is more than 7% away from its all-time high reached on May 10 at 8,259.19 points.

The car skids

In Germany, the Dax is not spared from the selling wave, as the index fell by 1.92% this Thursday, which was carried by the decline of its automotive space, which includes several big names such as Porsche, Volkswagen, Daimler or the tire manufacturer Continental. The reason can be found in Brussels: the European Commission has announced up to 38% additional duties on the import of Chinese electric cars into the EU. Berlin, very involved in China, fought with Sweden and Hungary to avoid sanctions, in vain… According to observers, Beijing could retaliate, although it is true that this markup is not enough to prevent the growth of sales of the new Chinese giants. such as BYD. Renault and Stellantis also suffered in Paris, falling 2.26% and 2.69% respectively.

If Paris is turning over, it is also because of the political uncertainty that reigns in France. At this stage, all indications are that a National Rally led by Jordan Bardella will be called to form the next government. ” What would he do then? asks Bruno Cavalier, chief economist at Oddo BHF. Its economic program is not finished financially. Any attempt to achieve this goal would mean increasing public deficits by several points of GDP. The situation of public finances, already precarious, would become alarming. Enough to make investors demand a much higher risk premium than today. »

There has been only one rate cut in the United States this year

The third element of market destabilization: the procrastination of the US Federal Reserve (Fed), unwilling to cut interest rates significantly this year. As expected, the monetary institution kept the Fed funds target within the current range of 5.25% to 5.5% for the seventh time in a row. Decision taken unanimously. The final press release, written after two days of negotiations, is almost unchanged. Only one word is modified: progress in slowing inflation is described as “ modest “, while previously the Fed talked about ” lack of progress “.

Members’ forecasts have seen further changes since Marchsupplied by Aurel BGC. On the one hand, inflation projections are revised upwards, the “central scenario” envisages resilient inflation, solid growth and sustainably higher key rates to contain inflationary pressures (an increase in the “neutral rate”, but not potential GDP). On the other hand, the “average” of members expects only one cut in key rates, compared to three last March, but in detail, opinions on one or two rate cuts differ widely, so this “average” does not want to say anything. » In the stock market, investors very clearly judge that there will be only one reduction in 2024. Especially since the latest US producer price data showed easing tensions but no cracks. Between April and May, the PPI fell 0.2%, the lowest since October, while the market rose 0.1%. On one, prices rose 2.2% versus expectations of 2.5% and 2.3% excluding food and energy, 0.2 points less than expected.

Among other stocks, banks are again hit hard, with BNP Paribas, for example, losing 2.94%. Broadcom climbed 13% on Wall Street. The electronics chipmaker revealed better-than-expected quarterly results and announced a 10-for-1 stock price split.

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