And hell! The Parisian market’s attempt to climb back up after three consecutive sessions of decline made pschitt in the afternoon… After a high of 6,303.66 points at midday, the Cac 40, embarked by Wall Street and the drop in oil, slowed the pace and then tipped into the red, to hit a low of 6,182.63 points, before ending at 6,210.22 points, down 0.19%. During this summer period, the trading volume remained low at 2.64 billion euros. Investors have more than legitimate doubts about inflation and global economic growth. Doubts that are reflected in the prices of black gold, the barrel of Brent North Sea and WTI falling 5.4% to $99.25 and $91.83 respectively.
German inflation heading towards 10%
On the inflation front, the news is not good (unsurprisingly). In Germany, where the figure was released at the start of the afternoon, consumer prices continued their upward trajectory in August. From 8.5% year on year in July, inflation rose to 8.8%, fueled by energy and food prices. She is ” at its highest level in over 70 years », calculates Commerzbank. For the specialists, it is clear: the hour is not with the inversion of trend. ” We expect the consumer price index to be around, or above, 10% in October after the withdrawal of temporary measures and the introduction of a gas tax. In addition, underlying price pressures are still very strong warns Andrew Kenningham, Chief Economist Europe at Capital Economics. This bodes ill for inflation in the euro zone, whose data for the month of August will be released on Wednesday at 11 a.m. It should see a surge of 0.1 points, to 9%, and to 4.1% in data core, i.e. excluding food and energy. Either way, this is a very clearly unacceptable pace for the European Central Bank (ECB).
“Jumbo” rise in rates in the euro zone?
Lagging behind in its monetary cycle, compared to the United States in particular, will the institution opt for a “jumbo” increase of 75 basis points in key rates at its meeting on September 8? This is the wish of some members of the institution. Bank of Estonia Governor Madis Müller believes the ECB should include the option of a three-quarter point hike in its options. Isabel Schnabel, member of the executive board, also judges that it is necessary to act with ” determination to fight inflation, even at the risk of weaker growth and higher unemployment “. The Governor of the Banque de France François Villeroy de Galhau also defended an action “ sustained and determined » of the ECB to prevent « higher inflation expectations force us into aggressive rate hikes “. Not everyone shares the same opinion. On Monday, Philip Lane, the ECB’s chief economist, advocated a pace ” regular » raising interest rates to fight inflation. Take in account the ” uncertainties related to the energy crisis and [des] risks of fragmentation, despite the introduction of a new mechanism of action to combat it, a rise of 50 basis points still seems to us the most likely “, analyzes Sebastian Paris-Horvitz of LBPAM.
In the United States, as in Europe, the change in monetary policy raised fears of a recession. The Old Continent would be more affected, but Jamie Dimon, the CEO of JP Morgan, calculated that the probability of a recession in the United States was now over 50%.
On the securities front, there is little news at the end of August. It will nevertheless be noted that Crossroads ended down 2.69%. JPMorgan downgraded its recommendation from “outperform” to “neutral”. Finally, TotalEnergiesdead last, dropped 3.62% in the wake of oil.