Cac 40 boosted by rumors of exit from zero Covid policy in China, Sunday news

The Paris Stock Exchange rose sharply on Tuesday, with the Cac up 1.8% at 6,379.48 points in the mid-40-day period, reaching an all-trade volume below 700 million euros. The movement is led by the large capitalization of the place and especially the luxury sector. LVMH, Hermes International and Kering It earns 3-4% on social networks, which Chinese authorities are considering gradually ending the zero-Covid policy, unconfirmed by Bloomberg and carried by rumours. The CSI 300 index gained 3.6% this morning. Zhao Lijian, spokesman for the Chinese Foreign Ministry, reacted by stating that “it is not”. not modern » of the government committee responsible for evaluating the means of ending such health restrictions still in force in the country.

I’m not surprised by this rumor floating around the internet about a conditional reopeningsaid Liu Xiaodong, fund manager at Shanghai Energy Asset Management. The State Council could wait for the expert group’s deliberations to determine the next step to be taken. The market is also ready to buy at any sign that an inflection point for the zero Covid policy is in sight. “.

A few “pigeon” words?

Caixin’s PMI manufacturing index, published this morning, also came in slightly above expectations at 49.2 in October versus 48.1 in September. Commodity-related stocks, which will benefit from China’s economic recovery, also rallied. TotalEnergies A 2.1% advance, Brent returns to $94 a barrel on the background of an increase of $2 in oil. oil services CGG and Vallourec During mining, get about 4% Eramet gets 5%. ArcelorMittal earning almost 2%.

However, less than 48 hours before the conclusion of the Fed’s monetary policy meeting, the tension is palpable. If there is no doubt that the central bank will increase the key interest rates by 75 basis points, the intervention of its chairman Jerome Powell for the fourth time in a row will be more closely watched. Will it be these few words of “doves” that the stock market will cheer? Nothing is less certain. For Swissquote’s İpek Ozkardeskaya, Jay could still give the doves a punch after late last week’s figures for the Fed’s preferred measure of inflation, the PCE price index.

Everything the Fed wants to prevent

At 6.2% over the year, it was flat in October compared to September, which may have boded well for a stabilization of inflation, but it held up in “core” data, i.e. excluding volatile items such as energy and food. increase. At 5.1%, it remains more than twice the central bank’s 2% target. While some members of the Fed have voiced the possibility of slowing the pace of monetary tightening in recent weeks, there is a good chance that Jerome Powell will end dovish hopes this week, as he did earlier this year. İpek Özkardeskaya concludes. A less offensive speech would not have restarted the stock market machine as an inflationary … everything the Fed wants to avoid.

We are confident that the Fed will raise key interest rates by 75 basis points as expected.also sums up Zenith Wealth Partners’ Jason Ray, who was interviewed by CNBC. But looking ahead, we’ll be watching very closely to see if the central bank starts to change its language on inflation or the pace of future interest rate hikes. »

No surprises in Australia

This morning Bank of Australia was not surprised. It raised the key interest rate by 25 basis points to 2.85% as expected, while signaling that further hikes will be needed in a country where inflation is at 6.1% for the year and a correspondingly expected peak of 8%. monetary authorities.

Nothing too important to report this Tuesday, especially since today is a public holiday in France. We’re just waiting for the US manufacturing PMI for October at 14:45, the ISM equivalent at 15:00, more closely watched by the markets, and construction spending in September.

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