The CAC 40 index dropped 0.97% to 7,261.50 points at 09:40, after opening down 1.06%. On Wednesday, it had finished up 0.67%.
On Wednesday evening, after the close of the European markets, the Fed gave a new update on its monetary policy.
"The key interest rate remained unchanged but, like a tourist train, the chairman of the US Federal Reserve has embarked all the skeptics in terms of interest rate increases," said Bruno Cavalier, chief economist at Oddo BHF.
For good reason, if the monetary policy committee (FOMC) of the Fed has kept its main rate in the range of 5.25 to 5.50%, central bank officials anticipate, by the end of 2023, a further increase in rates and rates should then fall less quickly than expected because growth in the United States this year should be twice as strong as what the institution anticipated in June.
Fed Chairman Jerome Powell "stressed that there is still a long way to go before inflation reaches the desired level of 2%," said Andreas Lipkow, an independent analyst.
"It will now be difficult for international equity markets to compete with rising yields in US bond markets. The attractiveness of bonds is increasing while the risk/reward ratio of equities continues to deteriorate," concludes the analyst.
In the bond market the day before, in the wake of the Fed's announcements, the yield on ten-year US government bonds reached its highest since November 2007, and the two-year maturity took off at its highest in 17 years.
Around 07:50 GMT, the 10-year US Treasury yields were at 4.42% against 4.41% at the close the day before, the 2-year one was at 5.15% against 5.18%. The French 10-year yield was at 3.27% against 3.23%, at levels at the highest since the end of 2012.
Across the Channel, the Bank of England (BoE) could decide on Thursday on a 15th interest rate hike, but a surprise decline in inflation in August leads many analysts to bet on an immediate pause in its monetary tightening.
In detail, inflation fell slightly in August to 6.7% against 6.8% in July, while economists were counting on an increase. If the institution opts for a pause, it would be the first since the beginning of the rate hike cycle initiated in December 2021.
Casino is still going backwards
The French distributor Casino dropped 2.30% to 1.61 euros around 09:45 after announcing the day before to have slightly lowered its revenue forecast for 2024, to 14.8 billion euros (against 15 billion announced in July). However, the group has raised its profitability target. Casino also announced that it had obtained from the Paris Commercial Court the extension until October 25 of the conciliation period for the restructuring of its colossal debt.
Carrefour in Spain
Carrefour fell 0.41% to 16.86 euros after announcing Wednesday that it had reached an agreement with the Spanish chain of shopping centers and supermarkets El Corte Inglés to buy 47 SuperCor stores in several regions of Spain, for an enterprise value of 60 million euros.
© 2023 AFP