The Paris Stock Exchange is struggling to extend its rebound of more than 2% over the last two sessions. The solidity of the labor market in the United States certainly rules out for the moment the specter of a recession, but the high number of job creations places the Federal Reserve in a delicate position. Oil stocks are surrounded after Saudi Arabia’s decision to reduce production, while the luxury sector suffers from profit taking.
Mid-session, the Cac 40 lost 0.15% to 7,259.43 points in a limited business volume of 530 million euros. The contracts future on American indices oscillate between balance and a decline of 0.3%.
A barrel of Brent from the North Sea rose 2.2% to $77.83 after gaining nearly 4%. Saudi Arabia plans to unilaterally limit production by around 1 million barrels per day starting in July, which would be its biggest cut in several years in order to boost prices. For its part, OPEC+ has decided to continue to limit the supply of the expanded cartel until 2024. TotalEnergies gains 0.9% and Vallourec 1.3%. Conversely, LVMH, Kering And Hermes fell between 0.8% and 1.3% after their rebound on Friday. Defensive sectors such as telecoms and utilities are progressing. Orange thus increases by 1.6% and Veolia by 0.8%.
To follow this afternoon, the ISM non-manufacturing index for May in the United States, as well as durable goods orders for April and industrial orders for the same month.
Difficult communication for the Fed
On Friday, the S&P 500 closed at its best level since last August in response to a labor market that remains strong with the creation of 339,000 jobs in May, while wage growth slowed slightly to 4.3% year-on-year. and that the unemployment rate increased by 0.3 points to 3.7% of the active population. These figures reinforce the feeling that the Federal Reserve should opt for a pause in its cycle of interest rate increases, before a probable tightening in July. The market estimates a 78% probability that the Fed funds rate will remain within a range of 5%-5.25% on June 14, according to the CME Group’s FedWatch tool.
“ Consumer price figures, to be released the day before the Fed’s monetary decision, could well be the main factor likely to tip expectations towards tightening if inflation is highobserves Jim Reid of Deutsche Bank. However, this seems unlikely before the publication of the CPI, as nothing will be 100% decided by then. We are therefore back to a certain uncertainty about the Fed’s strategy in the short term “, he specifies.
Michael Hewson, of CMC Markets, goes in the same direction, estimating that he “ would be easier to raise rates in June and keep options open for July. Communication would undoubtedly be easier, however, the differences within the FOMC already show that different opinions are starting to emerge going forward. “. The Fed entered a blackout period, preventing its members from speaking publicly until the announcement of its monetary decision.
The question of a break does not seem to arise for the ECB, whose president Christine Lagarde is due to speak this afternoon before the Financial and Banking Affairs Committee of the European Parliament. This morning, Governing Council member Boris Vujcic told Bloomberg that inflation in the eurozone is only falling gradually and that the likelihood of a re-acceleration of price rises is greater than that of a decline faster. For him, ” disinflation is expected to be gradual, with risks still tilted to the upside given evolving labor market tensions and underlying price pressures in the services sector “.