The Paris Bourse ends in decline on Thursday (-0.5% for the Cac 40, at 7,201.14 points), after a rebound of 1.7% in two days, while Wall Street evolves in dispersed order. The weaker-than-expected rise in U.S. producer prices reinforces the feeling that inflation has peaked, or is about to do so, after the surge in recent months due to supply chain tensions caused by the pandemic. These prices increased by 0.2% in December and by 9.7% over one year, against 0.4% and 9.8% respectively expected. The monthly data marks a sharper-than-expected slowdown from the previous month’s 1% rise, while the year-on-year change was 9.6%.
On Wednesday, the markets had ignored the increase, in line with expectations, of 7% in consumer prices over one year in December in the United States, the strongest since June 1982. As everyone expected the worst, the statistics has in no way changed expectations regarding the Fed’s next monetary tightening. The market expected bad numbers for the CPI, “thus, its ability to create a shock was relatively weak, explains Jim Reid, strategist at Deutsche Bank. Most forecasters think the peak is coming soon”, he continues.
Towards a first rate hike in March
Jerome Powell had prepared the ground during his confirmation speech before the Senate. The chairman of the Fed insisted on Tuesday on the need to raise interest rates in order to prevent inflation from setting in without weakening the economy. “Investors still face a crucial question: how will the Fed manage to deal with mounting price pressure without derailing the fragile post-pandemic economic recovery? », explains Pierre Veyret, at ActivTrades. Investors have started to understand that there will be four interest rate hikes this year in the United States, with a first hike scheduled for March.
St. Louis Fed President James Bullard told the wall street journal that four rate hikes could be justified this year to contain inflation. Patrick Harker, his counterpart at the Philadelphia branch, said in the FinancialTimes that he would support more than three rate hikes this year if inflation continues to rise and said he favored a first hike in March. Cleveland Fed President Loretta Mester, Raphael Bostic (Atlanta) and Esther George (Kansas City) also came out in favor of a rate hike in March.
Federal Reserve Governor Lael Brainard, speaking today before the Senate Banking Committee as part of the confirmation process for her nomination as Fed vice-chairman, expressed confidence in the ability of the US central bank to curb rising inflation, which is currently more than double the institution’s target. “We are taking steps on the monetary policy front which I am confident will reduce inflation while continuing to allow the labor market to return to full strength over time. »
Against this backdrop, Morgan Stanley clients expect financials to outperform this year, according to research presented at its annual conference this week. 45% of respondents believe that the sector will hold the upper hand. This is the highest percentage for this industry since 2015, the bank said in a note.
Renault confident for this year
In Paris, on the Cac 40, BNP Paribas and Societe Generale gained more than 2% on Thursday.
Biggest rise in the Paris star index, Renault took 4.5%. In 2021, the manufacturer achieved its objectives of reducing fixed costs and reducing the breakeven point by 30%, necessary to return to financial equilibrium, two years in advance, said CEO Luca de Meo. A year after the presentation of his “Renaulution” plan, the leader took stock with journalists at the Technocentre Renault in Guyancourt, in the Yvelines. Luca de Meo also expressed confidence for 2022 thanks to the effects of its restructuring and the renewal of its range, which should help it offset the persistent crisis in semiconductors. “We are relatively confident for 2022 but we know that it is a fairly volatile and uncertain world. » By training effect, the competitor Stellantis increased by more than 3% and Faurecia by more than 4%. Citi reiterated its buy view on the OEM, while lowering its operating profit estimate by around 10% for 2022 due to rising costs. The broker, however, remains convinced that the recovery in volumes will be strong and that the restocking should strengthen the momentum of profits in the second half.
Conversely, the luxury sector underwent releases, Hermes, Kering, L’Oreal and LVMH losing between 2% and 4%, weakened by the multiplication of infections with the Omicron variant in the city of Tianjin in China, which is home to the second port of the country and which is located at the gates of Beijing. China is the main market for luxury companies.
SopraSteria star of the day
Apart from the Cac 40, Sopra Steria signs the best performance of the SRD. The specialist in digital services and software publishing has raised its forecasts for the year 2021, ahead of the publication of its detailed results on February 24. He also announced that Vincent Paris had wished to be ” dump “ from his duties as Chief Executive Officer for family reasons and that the Board of Directors had chosen Cyril Malargé, current Chief Operating Officer, to succeed him as of March 1.
Soitec gained 3% as Credit Suisse started monitoring the stock with an “outperform” recommendation to target 304 euros. In the same sector, STMicroelectronics gained 3% on the DRS as TSMC unveiled better-than-expected guidance for the first quarter. Helped by strong demand for the new iPhone and chips for different industries, the Taiwanese group expects a turnover of between 16.6 and 17.2 billion dollars, at least 5% higher than the average. analysts’ estimates.