The initial rise made “pschitt” for the Cac 40, once again weighed down by its heavyweight and fifth capitalization of the index, Sanofi. At midday, the flagship index lost 0.28% to 6,506.24 points. The action of the pharmaceutical laboratory plunges, it, still of nearly 12%, which brings its fall to 20% in the space of three sessions.
At the origin of this tornado on the stock market, the announcement on Tuesday of the suspension of recruitment on a global scale as part of the trials carried out on its drug tolebrutinib in multiple sclerosis. This led the UBS research office to take stock of the case and decide to no longer be a buyer of the stock. In particular, investors seem to recall that Sanofi will soon face lawsuits in several US courts, including that of Illinois in a few weeks over allegations that the gastrointestinal drug Zantac could cause several forms of cancer or other ailments.
Not enough to benefit, therefore, from futures contracts once again well oriented in the United States, of the order of 0.2% to 0.4% according to the indices despite their strong progression the day before (+ 1.6% for the Dow Jones, +2.8% for the Nasdaq). Operators remain relieved after the publication of slightly more lenient inflation figures than expected by the consensus, at 8.5% over one year and 5.9% in “core” data, which gives hope that the Fed will be less aggressive in September at its next monetary policy meeting.
Cut rates in 2023? “Unrealistic”
” 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% expected 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.
Double date in September
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.
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.