The Paris Stock Exchange continues to rise this Thursday at the opening, in the wake of the excellent session on Wall Street the day before, where the Dow Jones gained 1.6% and the Nasdaq Composite 2.9%. The index of technology and growth stocks particularly benefited from the easing observed on the bond yield front after the publication of inflation figures for the month of July indicating a relative lull, which gives traders hope that the Fed will be less aggressive in September at its next monetary policy meeting. CME’s FedWatch tool, based on futures contracts on Fed-fundsnow suggests a main scenario of a 50 basis point increase in these key rates next month, against 75 basis points before the publication of the statistics.
At the start of the morning, the Cac 40 advanced by 0.53%, to 6,558.31 points.
A less aggressive Fed in September?
” The deceleration in the consumer price index in July is likely a big relief for the Federal Reserve, especially since the Fed has long insisted that inflation was transitory, which was not the caseestimated last night Nancy Davis, of Quadratic Capital Management, for CNBC. If we continue to see declining inflation, the Federal Reserve may begin to slow the pace of its monetary tightening. »
The President of the Chicago Fed, Charles Evans, was quick to welcome the figures presented on Wednesday, declaring that the stagnation of consumer prices in July (+0% over one month against +0.2% anticipated by the consensus and above all +1.3% in June) is the first “positive” inflation statistic since the Federal Reserve began to tighten its monetary policy. However, he sees the rates continue to be raised in 2023, unlike the most (too) optimistic. His colleague from Minneapolis, Neel Kashkari, yet among the most “dovish” until some time ago, considers that it would be completely unrealistic to lower rates next year.
At Pimco, we also remain on alert. With the decline in energy prices, June likely marks the peak of the headline inflation rate year over year, note their economists Tiffany Wilding and Allison Boxer. However, the year-over-year rate of core inflation is likely to reaccelerate in August and is unlikely to peak until September. Because the components behind the lull in July in core – airfares and hotels – tended to be more volatile, while the more ‘entrenched’ ones (rents/owners-equivalent-rent) remained firm, at 5.5% and 3.5 % respectively over one year for 2022 and 2023. » Double date in September, therefore, for the FOMC of the Fed and the consumer prices of August, which will be presented just before this meeting… Pimco continues to expect a rise of 0.75 point in rates next month, given the continued firmness of underlying inflation.
Another drop for Sanofi
Thursday will be an opportunity to look at other price figures, this time at production. Still for July, they should thus have decelerated to 10.4% over one year, against 11.3% in June. Also to follow, at 2:30 p.m., weekly jobless claims, expected to be almost stable around 265,000.
On the value side, Sanofi fails to recover, among the few drops of the day (-0.48%). The title of the pharmaceutical laboratory lost 10% in two sessions, weighed down by the cessation of recruitment for trials of its drug tolebrutinib in certain multiple sclerosis and by a deterioration of UBS analysts, who went from buying to neutral.
Valneva lowered its revenue forecast for 2022, which will now be in the range of 340 to 360 million euros, against at least 430 million previously, in view of “ the current resumption of sales of travel vaccines, the recognition of revenue related to supply contracts with the European Commission and the United Kingdom, and the amendment to the advance purchase agreement with the European Commission for the Covid-19 vaccine “.