The Paris Stock Exchange should open on a stable note in the wake of the decline on Wall Street yesterday. Markets remain focused on the US Federal Reserve’s strategy and the prospect of a possible pause in its monetary tightening cycle. With the Fed having entered a blackout period, the focus is naturally on economic indicators due to a lack of guidance from central bank officials. And they are no good. In Germany, industrial orders fell by 0.4% over one month in April, against an expected rebound of 2.8%, and fell by 9.9% over one year (-8.4% estimated). To follow, at 11 am, the retail sales statistics for the month of April in the euro zone.
In New York, the S&P 500 ended down 0.2% after hitting a nine-month high at the start of the session thanks to the new, temporary record set by Apple during the session. The Cupertino company presented its virtual and augmented reality headset, “Vision Pro”, which will be sold at a price of 3,500 dollars.
The unexpected slowdown in the growth of activity in the services sector in the United States in May cast a chill yesterday, suggesting, contrary to the strength of the job market, a weakening of the American economy. The ISM index indeed came out at 50.3 points, just above the critical threshold of 50 points which separates expansion and contraction of activity. However, like the moderation in wage growth, the prices paid component of the ISM index, which fell to a three-year low, supports the feeling that the Fed could skip a rate hike next week.
Fed: odds point to a pause
” With US central bank officials now muzzled until after the monetary decision is announced next week, markets must now reconsider whether there will be a pause (…) or another 25 basis point hike, summarizes Michael Hewson, chief market analyst at CMC Markets. The odds are still in favor of a pause, however inflation figures will still have to be faced “, He warns while the statistics will be published the day before the announcement of the decision.
This morning, the Australian central bank carried out a surprise increase of 25 basis points in its key rates to bring them to 4.1%, the highest in 11 years. The Reserve Bank has indicated that further monetary tightening may be needed to ensure that inflation returns to its target. Canada’s central bank will announce its monetary decision tomorrow.
Yesterday, Christine Lagarde, the President of the European Central Bank, paved the way for further rate hikes by repeating that it is still too early to estimate that underlying inflation has peaked despite “signs of moderation”. The ECB will deliver its monetary verdict on June 15, one day after the Fed.
On the side of the vakers, Saffronconfirmed that it is in talks to acquire certain flight control and actuation businesses of US aerospace and defense group Raytheon Technologies, as part of a competitive process. ” At this stage, it is not possible to assess the possibility of the outcome of these discussions or to specify the terms of a possible agreement. Safran said.