CAC 40: Panicked by the acceleration of prices in the United States, the CAC 40 plunged 2.2% over the week


(BFM Bourse) – The Paris Stock Exchange ended the week down sharply, frightened by the sharp rise in the PCE index, the Fed’s favorite inflation indicator. On a weekly basis, the CAC 40 lost 2.2%.

Efforts reduced to nothing. The Paris Stock Exchange, which had managed to limit its weekly decline to 0.5% around mid-session on Friday, could not cope with the latest data on US inflation.

The CAC 40 ended down sharply by 1.78% to 7,187.27 points, bringing its weekly decline to 2.18% frightened by the acceleration in prices across the Atlantic.

The PCE index, the Federal Reserve’s (Fed) preferred gauge for measuring inflation cooled the markets. Prices started to rise again in January in the United States, at 5.4% over one year against 5.3% the previous month. Over one month, prices accelerated by 0.6%, above analysts’ expectations, which anticipated a rise of 0.4% in January. Rising prices have not deterred US consumers from spending, quite the contrary. Consumer spending jumped 1.8% last month, the Commerce Department also reports.

“The release is not good news on the inflation front and perhaps indicates that inflation’s trajectory back towards the Federal Reserve’s (Fed) 2% target is likely to be bumpier – and longer – than markets expect. Indeed, after three months of falling inflation, investors expected the downward trend to continue,” comments Greg Wilensky of Janus Henderson.

This indicator sounds the death knell for investors’ hopes of a possible pause by the Fed on its rate hikes. The latest economic statistics published this week have led operators to worry about stronger monetary tightening than expected from the major central banks. “Considering the higher inflation data as well as the continued strength in the labor market and consumer spending, the Fed still has some work to do on the inflation front,” continues Greg Wilensky.

Saint-Gobain at the top, Fnac Darty and Valeo fall

On the business side, investors continued to scrutinize the numerous publications. Saint-Gobain (+4.8%) delighted the markets after signing historic records and performing better than expected on all of its annual indicators.

Excluding the CAC 40, Fnac Darty fell more than 9% after warning that its first half of 2023 would be difficult due to adjustments in household spending and energy costs.

Just like Valeo (-9.1%) after having published prospects for 2023 which do not please investors.

Excluding publications, Lisi rebounded 12.8% after announcing that it wanted to buy back 14% of its shares.

On other markets, the euro fell 0.5% against the dollar to 1.0546 dollars. Oil prices are on the rise. The contract on Brent from the North Sea for delivery in April took 0.9% to 82.92 dollars a barrel while that on WTI listed in New York for the same expiry gained 1% to 76.14 dollars a barrel.

Sabrina Sadgui – ©2023 BFM Bourse



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