(BFM Bourse) – The Paris Stock Exchange is trading very slightly lower on Wednesday, investors are looking for the slightest indication of the Fed’s intentions as inflation remains high in the United Kingdom in May.
For the third consecutive session, the Paris Stock Exchange takes on a red hue, caution remains in order on Wednesday before the first part of Jerome Powell’s half-yearly hearing before the American Congress. The CAC 40 is down 0.14% to 7284 points around 11:15 a.m., the day after a decline of 0.27%.
The boss of the American Central Bank (Fed) will speak on Wednesday on the state of the American economy before the American House of Representatives, before another intervention this time in the Senate on Thursday. For investors, every sentence uttered by Jerome Powell will be an opportunity to detect clues about the Fed’s future intentions to fight inflation.
Inflation, it was discussed this Wednesday morning with the British figures. Prices on the other side of the Channel do not show signs of calming down in May, contrary to the expectations of analysts and countries in the euro zone. Inflation held steady last month at 8.7% year-on-year, where the consensus had hoped for a modest decline to 8.4% on average.
This persistent inflation pleads for a new tightening of the Bank of England with, as a result, a 13th consecutive increase in its interest rates. The British institution will decide on Thursday on a probable change in its monetary policy intended to stem inflation.
“The Bank of England should raise its rates again by 25 basis points, to 4.75% and leave the door open to further increases by the end of the year”, estimates Xavier Chapard, member of the La Banque Postale AM’s research and strategy team.
The automobile drives ahead
The economic situation in China remains in the background of investors’ concerns. “The recovery in China, as we anticipated in our latest projections, lacks momentum with the publication of economic figures very often below expectations over the last 3 months, to the point of requiring the implementation of measures to support from the authorities, such as the lowering of financing rates for banks or even the reduction of bank deposit rates”, notes Alexandre Baradez (IG France). China on Tuesday lowered two benchmark rates to try to support demand.
As for values, the news remains dominated by the Paris Air Show, high mass of the aeronautics and space sector. Airbus (+0.50%), which dominates the race for the fullest order books, has signed a cooperation agreement with STMicroelectronics (stable) in research and development in the field of power electronics semiconductors.
Renault leads the CAC 40 thanks to a gain of 2.80% followed by Stellantis which rose by 1.30% The two car manufacturers benefit from the announcement of a rebound of 18.20% over one year new car registrations in Europe, according to the Association of European Automobile Manufacturers.
On the small and mid-cap side, Hoffmann Green Cement (+8.20%) announces the signing of an agreement with Shurfah Holding which defines the main principles of an exclusive licensing agreement to build four Hoffmann units in Saudi Arabia .
On other markets, the euro lost 0.1% to 1.0920 dollars. Oil is stabilizing after falling sharply on Tuesday on fears surrounding the recovery of the Chinese economy. The August contract on Brent from the North Sea is stable at 75.91 dollars a barrel while that of the same expiry on WTI listed in New York gleans 0.10% to 71.23 dollars a barrel.
Sabrina Sadgui – ©2023 BFM Bourse