The Paris Stock Exchange is quietly anchored in the green this Wednesday morning, pushed by a fairly good resistance from Wall Street the day before when the first exchanges had been strongly bearish, but the trading volumes are weak, of a little more than 700 million euros, pending the publication, at 2:30 p.m., of highly anticipated inflation figures in the United States for the month of April. The consensus is optimistic. That compiled by the Bloomberg agency forecasts inflation of 8.1% over one year last month, after a 40-year peak at 8.5% in March, which would allow some pressure to be eased on the Federal Reserve. American in the management of its monetary policy. The drop in daily Covid cases in Shanghai and Beijing is another element of support pending this statistical release of the day.
In the middle of the morning, the Cac 40 gained 2%, to 6,239.02 points. In New York, optimism is also in order. Futures contracts on major indices take 0.8% to 1.3%.
Three reasons to fear a recession
Can the Fed bring inflation down without causing a recession, i.e. achieving the so-called soft landing? This is the question posed by Schroders in particular, with this first element of response: Past experience shows that the recessions of the 1980s and 1990s followed a recovery in inflation similar to what we are experiencing today. Although there was much talk of achieving a soft landing during these two periods, it was not. “.
For the research bureau, there are three reasons why the probability of a recession today is high: Inflation takes root; monetary policy acts with long and variable delays; the current context is made more difficult by an already global slowdown in growth, in Europe in particular with the war in Ukraine, while the rise in commodity prices acts as a tax on consumption and the ‘zero-Covid’ policy hammers home the chinese economy “.
Covid cases drop in China
Inflation was also on the agenda in China and Germany. In the first country, the producer price index rose by 8%, beyond the 7.7% expected over one year in April. That of consumer prices increased by 2.1% over one year, against +1.9% expected. Chinese stocks are still in the green on Wednesday, supported by data suggesting that the number of daily infections of the virus is falling in Beijing as in Shanghai, where the containment could be lifted very soon. In Germany, inflation was confirmed at 7.8% over one year in April.
Among the few other appointments of the day, which will very probably pass into the background, we will learn at the end of the morning of the new growth projections of the European Commission and of the weekly oil stocks in the United States.
Bluebell calls for change at Saint-Gobain
On the business side, Alstom raised its target for synergies linked to the acquisition of Bombardier Transportation, after an adjusted net loss at the end of its 2021-2022 financial year, due to a depreciation of its stake in the Russian company Transmashholding. The railway equipment manufacturer expects to generate 400 million euros in synergies linked to the acquisition of Bombardier Transport in 2024-2025. In the meantime, the group returned to a positive cash position in the second half of last year. The group does not feel any need to proceed with a capital increase. The action lost 5% not without having jumped more than 8% in the first exchanges, analysts seeming disappointed by the few indications given for this financial year 2022-2023.
Activist fund Bluebell Capital Partners called Saint Gobain (+0.6%) to reshape its business and replace its president to counter what it calls a “disappointing performance”, the Financial Times reported on Wednesday.
Eiffage (+0.4%) confirmed its outlook after a 10% increase in activity in the first quarter. In February, Eiffage was aiming for a slight increase in its construction and public works activity for 2002 and more sustained growth in concessions, with, at the same time, results expected to improve in the two divisions.