CAC40: erases part of its gains after ECB meeting

(CercleFinance.com) - After gaining more than 1% in the morning, the Paris Bourse erased a large part of its gains and now stands at just 0.
4%, around 7,440 points.

At 2.15pm, all eyes were on the European Central Bank (ECB) which, as anticipated by the markets, lowered its key rates by a quarter of a point, a further gesture of easing its monetary policy in an economic context that remains gloomy.

The interest rate on its main refinancing operations will be cut to 3.65%, that on the marginal lending facility to 3.90%, while the rate on the deposit facility will rise to 3.50%.

In its press release, the ECB explains that recent inflation data are broadly in line with expectations, with pressures on labor costs easing.

Financing conditions remain restrictive, and economic activity remains sluggish, reflecting weakness in private consumption and investment", explains the Frankfurt-based institution.

The central bank adds that it has revised its forecasts downwards, expecting economic growth to reach 0.8% in 2024, then 1.3% in 2025 and 1.5% in 2026.

In its press release, the ECB explains that recent inflation data are broadly in line with expectations, with pressures on labor costs easing.

The markets will have to wait a week for the decision of the US Federal Reserve (Fed), which could in turn announce a cut in its key rates through its Chairman Jerome Powell.

"We continue to believe that the pace of decline in the cost of money is too slow in the eurozone, given the weak growth", said Christopher Dembik, Investment Strategy Advisor at Pictet AM, this morning.

Without a firmer recovery in credit, which would boost household and business investment, there is a real risk that economic stagnation will take hold in the eurozone for a long time to come", he warned.

On the statistics front, the Labor Department announced that it had recorded 230,000 new jobless claims in the USA in the week to September 2, up by 2,000 on the previous week (the figure for which was revised upwards, from 227,000 to 228,000).

It should be noted that producer prices rose at a pace in line with expectations in the USA in August, a development which shows that inflationary pressures are now better under control in the country.

The Producer Price Index (PPI) thus rose by 0.2% last month, after remaining unchanged in July, a figure in line with economists' forecasts.

Over a year, producer prices are up by 1.7%.
On the bond front, 10-year T-Bonds stagnated at 3.65%, while German Bunds of the same maturity were at 2.14% (+2.5 pts).

On the forex front, the euro gained 0.2% against the greenback, at $1.104/Euro.

Brent crude oil rose by 1.2% to $71.6 a barrel, while gold gained more than 1% to $2550 an ounce.

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