(BFM Bourse) – The CAC 40 is falling sharply in the middle session. China’s growth slowed significantly last year. Furthermore, the ECB president declared that the market’s optimistic expectations of rate cuts are not helping to tackle inflation.
Tough session for the CAC 40 this Wednesday. The Parisian index fell 1.2% to 7,306.50 points at mid-session, weighed down by growing market doubts about Chinese growth and future rate cuts from major central banks.
China announced on Wednesday morning that economic growth reached 5.2% last year, exceeding the government’s target of 5%, falling to the lowest level since the 1990s.
“On a quarterly basis, the economy grew +1.0% (versus +1.1% expected) in the fourth quarter, representing a slowdown from the revised pace of +1.5% in the previous quarter”, however, points out Jim Reid. Deutsche Bank.
“The outlook for 2024 remains uncertain, with the world’s second largest economy still grappling with the current real estate crisis, deflationary pressures and low consumer and business confidence,” the establishment added.
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Apart from this, there is tension in the bond market. Yields on 10-year sovereign debt are narrowing in the euro zone, with German bonds moving to 2.828%, compared with 2.260% on Tuesday evening.
Speaking to Bloomberg from the Davos Economic Forum, European Central Bank (ECB) President Christine Lagarde blew hot and cold a bit this Wednesday. Although she called a rate cut “likely” by the summer, the central banker also warned that the market’s optimistic expectations of a key rate cut were not helping the ECB fight inflation.
“We believe there are downside risks in the short term, as markets may think there are too many cuts (rates, editor’s note) too soon,” HSBC’s Europe strategists warned in a note this Wednesday.
On the value side, OVHcloud gained 6.3% after the group met its medium-term targets during the investor day.
Worldline lost 1% as the payments group looks to reassure its shareholders and develop a strategy to avoid any hostile takeover, according to Reuters.
Escort fell 2.6% after delivering its order volume and its turnover for the whole of 2023.
On other markets, the euro was almost steady against the dollar, at $1.0878. Oil has been weighed down by China’s weak growth. The March North Sea Brent contract fell 1.8% to $76.86 a barrel, while the February contract fell 2% to $70.97 a barrel.
Julian Marion – ©2024 BFM Bourse
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