Supported by Jerome Powell’s commitment to control inflation, the Paris Stock Exchange was not shaken by the rise in line with expectations in consumer prices in the United States. These increased by 0.5% over one month and 7% over one year in December, unheard of since 1982, against respectively + 0.4% and + 7% anticipated by the market. Excluding volatile items such as food and energy, the increase is 0.6% over one month and 5.5% compared to December 2020 (+ 0.5% and + 5.4% expected).
Some economists believe that inflation could peak in the first quarter, so the statistic should be viewed from a longer-term perspective. Moreover, these figures are not the most watched by the Fed, which prefers the PCE index of personal consumption expenditure appearing in the statistics of household income and expenditure.
At 2.45 p.m. on Cac 40 gained 0.63% to 7,228.65 points in a business volume of 1.55 billion euros. The contracts futures March on US indices appreciated by around 0.4%. The S&P 500 ended a streak of five straight declines on Tuesday night, while the Nasdaq Composite rose more than 1%.
Prevent inflation from setting in
During his confirmation hearing before a Senate committee, the Chairman of the Federal Reserve said on Wednesday that the US economy is strong, but monetary tightening is needed to contain inflation and prevent it from falling. installs without hampering growth. The Fed will engage in a policy ” closer to normal, but it’s a long road to normal considering where we are at (…) and this policy should not have a negative effect on employment “, did he declare.
This normalization should involve rate hikes, reduction of the Fed’s asset purchase program and its balance sheet. However, the intervention of Jerome Powell did not include any major modification compared to what had already been announced. He also gave no indication of the timing or number of rate hikes to be expected, nor a timing for the reduction in the size of the central bank’s balance sheet. For Paul Ashworth, US chief economist at Capital Economics, the first rate hike ” should take place during the FOMC in March, whereas previously we anticipated it in June “.
The punch bowl neither too full nor too empty
The president of the Fed ” delivered a performance worthy of Goldilocks Et Les Trois Ours Jeffrey Halley, Senior Market Analyst at Oanda, wrote this morning. ” Jerome Powell has indicated that the Fed may raise rates to contain inflation, which it plans to quickly begin the process of reducing its balance sheet, but he also announced that inflationary pressures are expected to peak in the middle of year », He sums up.
Some investors believe that the US and European markets will be able to bear a higher cost of credit provided economic growth supports corporate results and inflation peaks. ” If bond yields tighten and earnings decline, equities should suffer this year, says Luca Paolini, chief strategist at Pictet Asset Management. But the fourth quarter earnings season could also be a catalyst for the next rebound », He nuances.
The yield on the US 10-year bond stabilizes at 1.7332% after hitting 1.8% earlier in the week, while the German Bund of the same maturity eases slightly to -0.0610% after touching – 0.01% Tuesday, on the verge of returning to positive territory for the first time since May 2019.
The Fed will publish, at 8 pm, its Beige Book, a document which takes stock of the evolution of the economy over the past six weeks. It will also serve as a working document for the Monetary Policy Committee meeting on January 25-26.
End of the year with a bang for Rexel
Largest increase in SRD, Rexel 7.8% advance. Bolstered by stronger-than-expected sales activity in the fourth quarter and its efforts to control costs, the electrical equipment distributor indicates that it has exceeded its objectives for the year 2021. Daily sales growth should have reached 15, 3% last year, versus a forecast of between 12% and 15%, and the Adjusted EBITDA margin is expected to stand at 6.2%, versus a forecast of 5.7%.
OVHcloud increased by 3.9%. The specialist in cloud computing services has confirmed its objectives for its financial year as at August 31, 2022, after recording a 13.9% increase to 187.2 million euros in its turnover in the first quarter.
ArcelorMittal gained 4.4% in the wake of iron ore prices as torrential rains in Brazil interrupted production at the country’s mines, including those of world number two Vale. For his part, Eramet appreciates 5.6%, driven by the rise in nickel prices.
TotalEnergies climbs 2.2% as a barrel of Brent from the North Sea hit 84.35 dollars, its highest level since the emergence of the Omicron variant of the coronavirus, last November. Oil prices continue to benefit from the anticipation of increased demand.
Conversely, Renault loses 2.3%. The automaker risks collective action from owners of Renault, Nissan, Dacia and Mercedes vehicles equipped with the 1.2 TCe petrol engine and victims of breakdowns, reports AFP, citing their lawyer.
Finally, Nexity loose 4.3%. Oddo BHF downgraded the property developer from “outperformance” to “neutral” in anticipation of a probable slowdown in the group’s growth this year and an increase in debt.