Disappointment on US inflation, the Cac 40 returned below 6,300 points

Based on the hope of a sharp decline in inflation in the United States, market optimism was dampened by the announcement of a less marked than expected slowdown in consumer prices. The latter increased by 0.1% in August and by 8.3% over one year, against respectively -0.1% and +8.1% expected by analysts. Excluding food and energy, prices rose by 0.6% over one month and 6.3% over one year, marking an acceleration compared to the 5.9% increase recorded in July. nevertheless the second consecutive decline in the rise in prices in global data since the peak of almost 40 years reached in June at 9.1%,

Shortly after 4 p.m., the Cac 40 lost 0.90% to 6,276.54 points, after a peak at 6,394.18 (+0.95%) in a limited business volume of 1.7 billion euros exchanged. The flagship index thus puts an end to a series of five consecutive upward sessions. In New York, the Dow Jones fall of 2.22% and the Nasdaq Composite by 3.31%.

The Fed under pressure

Today’s statistic is, along with the producer price index (expected Wednesday), one of the last concerning inflation before the Fed’s September 21 monetary decision. The question of the magnitude of the next rate hike, 50 or 75 basis points, is no longer debated.

The 0.6% rise in consumer prices in ‘core’ data, twice the consensus expectations, confirms that the Fed will have to raise its rates by at least 75 basis points next week. There could be last minute speculation that the Fed will even go as far as 100 basis points, although with rates close to neutral we doubt that will happen. writes Paul Ashworth of Capital Economics.

According to CME Group’s contract-based tool Fedwatch future on Fed funds, the market assesses the probability of a 75 basis point hike in interest rates next week at 88%. That of a tightening of 100 basis points is estimated at 12% whereas it was not even envisaged yesterday.

 A rise of 100 basis points not ruled out
A rise of 100 basis points not ruled out | Photo credits: CME Group

Engie and Euroapi in good shape

Engie advance of 2.5%. The European Union plans to propose an “exceptional and temporary” tax on oil and gas companies, as well as those operating in refining and coal, reports Bloomberg. Engie, which is only an energy distributor, is therefore not affected by this measure.

Euroapi rose 2.4%, supported by a note from Deutsche Bank, which raised its target price from 20 to 22 euros while maintaining its recommendation to “buy”.

Ipsen rises 1.3%. Societe Generale raised its price target from 127.20 to 139 euros, maintaining its “buy” opinion on the title of the pharmaceutical group.

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