Paris (awp/afp) – The Paris Stock Exchange lacked confidence on Wednesday after poor inflation figures the day before in the United States, which justified the American Central Bank continuing to tighten its monetary policy to get out of the inflationary dynamic.
After opening in the red, the CAC 40 index was in equilibrium (-0.02%) at 6,244.36 points around 10:30 a.m. against a backdrop of encouraging news for France.
The French government has raised its growth forecast for gross domestic product (GDP) from 2.5% to 2.7% for 2022, Economy Minister Bruno Le Maire told Cnews on Wednesday.
The risk of tension” on the electricity network this winter is “increased”, but remains “controllable thanks to a strong mobilization” in favor of energy savings, also affirmed the manager of the electricity transmission network (RTE ).
The day before, an indicator of US consumer prices came out worse than expected cut short five sessions of rebound in the Parisian rating which ended down 1.39%.
Inflation edged up 0.1% in August from July, as economists expected a contraction of the same magnitude.
But it is above all the stronger than expected acceleration of underlying inflation, calculated on all prices except those of food and energy, (+6.3% over one year and +0 .6% over one month), which is the most uncomfortable.
“This latest inflation figure has once again calmed the overly optimistic expectations regarding the positioning of monetary policy for the coming year,” commented Sebastian Paris Horvitz of LBPAM.
“In fact, the unpleasant surprise contained in the evolution of prices has resulted in a further upward revision of expectations for the terminal level of the Fed’s key rates in 2023. Since yesterday, the market has seen the key rate exceed 4% before the spring of 2023”, he observes.
Before this cold shower, investors hoped that the Fed would change its tone soon to ease its monetary policy during 2023.
Now, one week before a Fed meeting, they are wondering how far and for how long it will tighten its monetary policy. They fear that this cycle will end in a recession and thus remain fixed on the US bond yield curve, a marker of inflation expectations and the risks of recession.
In Europe, the two-year yield on the German bond hit 1.4%, a level last seen in 2011.
Strike at Air France
Air France decided to preventively cancel 55% of its short and medium-haul flights and 10% of its long-haul flights on Friday due to a strike by French air traffic controllers, the company announced on Wednesday. The Air France-KLM share lost 1.77% to 1.45 euros around 10:30 a.m.
Purchase of Stellantis shares from General Motors
The French car manufacturer will buy back from the American manufacturer General Motors 920 million euros of its own shares, or about 2.2% of its capital. The Stellantis share rose 0.29% to 13.60 euros around 10:20 a.m.
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