European markets like Wall Street ended the week down sharply, weighed down on Thursday and especially Friday by the outlook given by the ECB and by US inflation.
The news of the week was poor for companies but rich for the economy. It was she, in fact, who led the debates and pushed the markets down. After four out of five sessions in the red, the Cac 40 showed a weekly loss of 4.6%, the most marked since the beginning of March. The trend was similar on Wall Street, with the Dow Jones down 4.22% on the week and the Nasdaq down 5.36% (Friday at 5 p.m.), a 27% plunge since the start of the year.
Once again, market stress came from inflation and interest rate expectations, in Europe and the United States. After a calm session in Paris on Pentecost Monday, the wait-and-see attitude and caution dominated Tuesday and Wednesday, before the two major meetings of the week. The first of these, the ECB’s monetary policy announcements, began to chill the atmosphere on Thursday. The Eurozone Central Bank has confirmed that it is planning a first increase in its key rates, by a quarter of a point, at the end of its July meeting, but its president Christine Lagarde has not ruled out a further tightening of the screw. important after the summer, if the pace of inflation remains at too worrying a level.
The coldest shower came on Friday (-2.69%) from the United States, concerning, precisely, the rise in prices. At 8.6% on an annual basis in May, it was further accentuated compared to April, while the consensus of economists was counting on the beginning of a decline, to 8.2% (according to FactSet). What rekindle concerns about the position of the Federal Reserve, a few days before its next monetary policy committee, on June 14 and 15. Investors fear that the increases of half a point in the fed funds increase or even be increased to three-quarters of a point to curb inflation. The coming week is therefore also proving to be high risk.
CECILE LE COZ