Not enough to revive European equity markets already in the red since the start of the morning… on the contrary. Published at the end of the morning, inflation in the euro zone exceeded expectations in May, peaking at 8.1% over one year, beyond the 7.5% of April and the 7.8% expected by the Bloomberg Consensus. The reverse would have been surprising, given the figures that were presented yesterday in Germany and Spain, where price increases accelerated to peaks of 8.7% year on year in both countries. In France, inflation rose to 5.8% in harmonized data for the month of May.
In the middle of the day, the Cac 40 lost 0.98%, to 6,498.37 points, in a meager trading volume of less than 850 million euros.
” Headline and Core Inflation [+3,8% après +3,5% en avril, en raison de l’augmentation des prix des services et des biens non énergétiques] rising again more than expected, the case for a quick exit from negative interest rates is now compellingJudge Andrew Kenningham, of Capital Economics. The ECB should now confirm that it will raise rates in July and we believe it will leave the door open for a 50 basis point hike. » The increase linked to energy amounts to 39.2%, against 37.5% in April. That related to food went from 6.3% to 7.5% in the space of a month, ” it should increase further in the coming months due to supply problems linked to Ukraine. »
oil push
Almost all the components of the flagship index are in the red, with the notable exception of TotalEnergies (+1.16%, the highest since autumn 2018), driven by the rise in Brent prices, to 123.70 dollars per barrel. Yesterday evening, European leaders succeeded in ratifying an embargo on Russian oil. It will, however, be in two stages. It will first concern maritime deliveries by the end of the year, then, ” as fast as possible », the crude delivered by pipeline. The other measures of the sixth sanctions package against Moscow will come into force soon.
Closed yesterday for Memorial Day, the American markets are preparing to reopen their doors on Tuesday, also rather in the red. Futures contracts on Dow Jones, S&P500 and Nasdaq Composite yield from 0.42% to 0.75%. After the “off” day the day before, a statistical catch-up session is scheduled for this afternoon. We will learn about the evolution of house prices in March, as measured by CaseShiller and the FHFA index, the Conference Board’s consumer confidence index for the month of May, and finally the Chicago PMI indicator in May.
” Not fast enough… ”
The recovery in activity observed in China in industry and services has had no effect on the trend. Presented this morning, the official PMI of purchasing managers in the manufacturing sector stood at 49.6 points in May, up from 47.4 points in April and even the 49 expected by the consensus. . A level that nevertheless remains below the 50-point mark, which separates the growth phase from the contraction phase compared to the previous month. The services component also recovered, to 47.8 points, after falling to 41.9 in April.
For Bo Zhuang, at Loomis Sayles, interviewed by CNBC, “ things…are getting better, but not enough. The worst of China’s Covid wave growth shock may have passed, but the country is still seeing very gradual and slow progress in normalization “.