The Paris Stock Exchange is coming to its senses the day after the poor inflation figures in the United States which caused the biggest drop on Wall Street since June 2020. The Cac 40 manages to contain its losses and even remains a winner over the week at the favor of rising contracts future on American indices, which point to a jump of around 0.5% at the opening of the New York Stock Exchange this afternoon. But the statistics for producer prices across the Atlantic, scheduled for 2:30 p.m., could break this momentum if the expected calm is not there.
Mid-session, the Bedroom 40 lost 0.12% to 6,238.47 points in a business volume of around 600 million euros.
Consumer prices rose by 0.1% in August in the United States, against an expected contraction, and by 8.3% over one year, while marking a slowdown compared to July (8.5%). But, excluding food and energy (core), prices increased by 6.3% over one year, against 5.9% in July. The statistics therefore reinforce the scenario of an increase of at least 75 basis points in the Fed’s key rates next Wednesday.
Fed: the rate hike of the century?
According to CME Group calculations based on contracts future on Fed funds, the probability of a tightening of 3 quarters of a percentage point is estimated at 68% and that of a rise of 100 basis points is estimated at 32%, against 0% before the publication of the statistics on Tuesday afternoon.
” Two historically high rate hikes this summer seem to have had a weaker than expected immediate impact on the inflationary environment, leading markets to believe the Fed might be forced into the hike of the century “, say strategists at JPMorgan.
Closer to home, consumer price inflation slowed to 9.9% year on year in August in the UK, after 10.1% in July, a 40-year high, as the market expected an acceleration of 10.2%.
Legrand and L’Oréal degraded
Large cyclical stocks are generally down. Alstom, Airbus and Saffron lose more than 1%.
Biggest drop in the Cac 40, Great fell 1.5% following a note from Jefferies, which went from “keep” to “underperformance” on the title with a price target t reduced from 79 to 65 euros.
In the same sector, Schneider-Electric On the contrary, it gained 0.4% as Deutsche Bank raised its recommendation from “hold” to “buy”.
Among other analyst ratings, Exane BNP Paribas went from “outperforming” to “neutral” on L’Orealwhich lost 1.1%.
Stellantis appreciated by 1% after the announcement of an agreement with General Motors to buy back some of its own shares held by the American group.