Jerome Powell, the chairman of the U.S Federal Reserve, recently stated during a speech at the International Monetary Fund that monetary policy is not yet restrictive enough and that further interest rate hikes may be necessary. This announcement has caused a cool-down in the financial markets, with a 0.96% drop in the CAC 40 index in Paris and a rebound in U.S. indices.
The yield on U.S. ten-year Treasury bonds has bounced back to 4.63%, while demand for long-term U.S. debt appears to be weaker. This comes as expectations for inflation in the next year increased to 4.4% in November, which is not a positive sign for interest rate trajectory.
In other news, the U.S. Food and Drug Administration (FDA) has approved the experimental chikungunya vaccine developed by French biotech company Valneva. This makes it the first authorized vaccine in the world for this disease.
However, not all companies have had positive outcomes recently. Scor, a French reinsurance company, reported a lower-than-expected net profit, leading to a 3.5% decrease in its stock price. Richemont, the owner of Cartier, also experienced slowed sales growth in the first half of the year, with a 3% decrease in revenue for its watch division, resulting in a 5.2% decrease in its stock price.
Additionally, Diageo, a global alcoholic beverages company, faced its biggest drop since 1997, causing stock prices for Pernod Ricard and Rémy Cointreau to also decline. The slowdown in growth in Latin America and the Caribbean will impact Diageo’s half-year profits.
These events have had significant impacts on the financial and healthcare sectors, and their implications will continue to be monitored closely by investors.
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