The Paris Stock Exchange, down sharply this morning, then wiped out most of its losses thanks to the publication, at the start of the afternoon, of the consumer price index in the United States, which shows a surprise slowdown in inflation, excluding volatile elements, in March. Consumer prices rose by 1.2% over one month, as expected, and by 8.5% over one year, against 8.4% expected. In “core” data (excluding food and energy) the rise comes out at 0.3%, against 0.5% in February and an estimated 0.5%. On the bond market, the yield on the American 10-year bond eased, at the time of the closing of the European stock market indices, by 7 basis points to just under 2.71%, after having reached 2, 83%, this morning, for the first time since the end of 2018.
As Wall Street rebounds from yesterday’s pullback, the Bedroom 40which had escaped the red wave the day before, investors saying they were relieved by the advance of Emmanuel Macron after the first round of the French presidential election, ended today down 0.28%, at 6,537.41 points, far from its lowest of the day (-2%, at 6,424.97 points).
“The big news from the March statistic is that underlying price pressures finally appear to be easingnotes Andrew Hunter of Capital Economics, for whom the March price increase will peak. » He adds, however, that these figures should not change the Fed’s plans to raise interest rates by 50 basis points, but “they reinforce our feeling that after being slow to realize that the initial rise in prices was not transitory, Fed officials are now a little too pessimistic about how quickly it will come down. »
Hammer blow on the economy
The recent surge in inflation has prompted the more dovish members of the Fed’s Monetary Policy Committee (FOMC) to believe that it was necessary to act quickly and forcefully to counter the rise in prices. Long considered one of the most “dovish” within the FOMC, Charles Evans, the president of the Chicago Fed, considered that an acceleration of the pace of rate hikes to fight inflation must be debated.
Fed Governor Christopher Waller meanwhile said the central bank is doing all it can to prevent monetary tightening from stifling growth. Indeed, he described rate hikes as a tool for ” Brute force “ may have the effect of a ” hammer “ by causing ” collateral damages “ on the economy. For now, the market is anticipating 50 basis point hikes in the fed funds rate during the next two meetings of the Fed’s monetary policy committee.
According to Bank of America Securities’ latest monthly survey of fund managers, investor optimism about global economic growth is at an all-time low, while fear of high inflation combined with stagnating activity had never been so high since August 2008.
Start of lockdown easing in Shanghai
Oil prices are on the rise again on Tuesday, with the price of Brent rising 7% to $105 a barrel, following allegations that Russian forces have used chemical weapons against the besieged city of Mariupol and also doped by China’s decision yesterday to ease confinement in certain areas of the city of Shanghai.
On this latest information, the shares of luxury companies LVMH and Hermes end up on the Cac 40. LVMH will publish, just after the closing of the Stock Exchange, its turnover for the first quarter.
Conversely, Societe Generale, sought yesterday following the bank’s decision to withdraw from Russia, ended Tuesday down nearly 2%. The European banking sector was generally under pressure today on the stock market, Deutsche Bank and Commerzbank closing on falls of more than 8%. A mystery investor has sold tens of millions of shares representing a stake of more than 5% of the capital of the two German banks for a total amount estimated at 1.75 billion euros.
Biggest drop in the Cac 40, Sanofi (-2.8%) suffered some profit taking after its record high yesterday.
The tester Eurofins Scientific also finished at the bottom of the table while, in the same sector, bioMerieux lost almost 6% in reaction to the publication of a quarterly turnover of 837 million euros “in organic decline of 4.5%, do we see within the financial analysis firm Midcap Partners, slightly below consensus expectations (840.5 million) on a demanding comparison basis (+16.5%)”unsurprisingly reflecting the impact of slowing demand for Covid testing.