The rebound is confirmed on the Paris Stock Exchange, the Cac 40 gaining 1%, to 6,537.27 points, in the perspective of the first rising exchanges in New York, where index futures contracts rose from 0.4% to 0 .7%. But the volumes are worthy of the summer break, around 700 million euros.
If the next inflation figures for July, which will be presented on Wednesday across the Atlantic, are on everyone’s mind, the operators are relying, for the moment, on the quality of the latest employment report, which very clearly shows that the country is not in recession. Last month, the US economy created 528,000 jobs in the non-agricultural sector, twice as many as expected, for an unemployment rate down 0.1 point, to 3.5% of the working population, a plus low since the late 1960s.
Another supportive factor is the bill, passed in the Senate on Sunday, providing more than $300 billion in energy and climate investments, which benefits companies moving in the clean energy space. An amount that is part of a larger plan to fight inflation, for a total of 430 billion. The project, which notably includes an increase in certain taxes on companies, as well as on share buybacks, must now pass the House this week where it should also be adopted.
Pressure on the Federal Reserve
The operators know it, however, everything could (and even should) be played with the publication, in two days in the United States, of the inflation figures for the month of July. A key figure for the Fed in the evolution of its monetary policy, especially since the average hourly wage has increased more than analysts expected, so much so that it is now up by 5.2 % over one year, beyond the 4.9% expected by the consensus.
Enough to rekindle the flame of central bank hawks, with a further 0.75 point increase in key rates now on the table for the next FOMC meeting in September. ” It’s all about the Fed. Such a report puts pressure on the central bank to tighten rates for longer “, estimated Adam Sarhan, managing director of 50 Park Investments… and perhaps more strongly. The latest comments from members of the Fed argue, moreover, in this direction. This weekend, Michelle Bowman, of the Board of Governors, thus warned that we should expect sharp rate hikes at the institution’s next meetings, in order to curb a surge in prices which does not give no sign of appeasement. ” Similar size increases [75 points de base] should be considered until we see inflation come down consistently, significantly and sustainably “, she said.
8.7% over one year
This Wednesday, it is still expected a slight decline in inflation. In July, it should have fallen from 9.1% to 8.7% over one year. However, this would only be due to the weakening of energy prices, down 15% over the month. For the time being, and before the publication of these figures, the market is ‘pricing’ at almost 70% an upcoming 75 basis point hike in key rates. Also to follow the next day are producer prices for the same month and the inflation component in the confidence index as calculated by the University of Michigan on Friday.
On the business side, it’s rather dead calm during this summer break. Veolia Environnement sold Suez’s UK waste business to the Australian Macquarie for 2.4 billion euros. The action gained 1.7%.
The slump in the 10-year bond yield is benefiting the few technology and growth stocks on the rating, such as Teleperformance (+2.5%), Dassault Systems (+2%) or even Capgemini (+1.1%).