The Paris Stock Exchange catches its breath after a gain of 1.7% in two days, while Wall Street evolves in dispersed order in the first exchanges. The weaker-than-expected rise in producer prices in the United States reinforces the feeling that inflation is on the way to calm after the surge in recent months due to tensions in supply chains caused by the pandemic. These prices increased by 0.2% in December and by 9.7% over one year, against 0.4% and 9.8% respectively expected. The monthly data marks a sharper-than-expected slowdown from the previous month’s 1% rise, while the year-on-year change was 9.6%.
At 4:20 p.m., the Bedroom 40 lost 0.69% to 7,187.62 points in a business volume of 2 billion euros. In New York, the Dow Jones gains 0.35% and the S&P500 0.1%, while the Nasdaq Composite loses 0.3%.
US banks in the running
With the Fed focused on controlling inflation, the rise from 23,000 to 230,000 in weekly jobless claims (200,000 expected) is relegated to the background. Investors now expect three, possibly four, rate hikes from the Fed this year and the start of the process of reducing the size of its balance sheet. The market is also preparing for the first wave of fourth quarter results in the United States with the publication, tomorrow, of the accounts of the banks Citigroup, JPMorgan Chase and Wells Fargo, as well as those of the world leader in asset management BlackRock. .
Morgan Stanley clients expect financials to outperform this year, according to research presented at its annual conference this week. 45% of respondents believe that the sector will hold the upper hand. This is the highest percentage for this industry since 2015, the bank said in a note.
The probability of a shock was very low
On Wednesday, the markets ignored the increase, in line with expectations, of 7% in consumer prices over one year in December in the United States, the strongest since June 1982. As everyone expected the worst, the statistics has in no way changed expectations regarding the Fed’s next monetary tightening. The market was expecting bad numbers for the CPI, ” thus, its ability to create a shock was relatively low, explains Jim Reid, strategist at Deutsche Bank. Most forecasters think the peak is coming soon, but the pace of the slide is debated he continues.
Jerome Powell had prepared the ground during his confirmation speech before the Senate. The chairman of the Fed insisted on Tuesday on the need to raise interest rates in order to prevent inflation from setting in without weakening the economy. Remarks largely in line with the “minutes” of the FOMC of December and which confirmed the expectations of the market which has already integrated three, or even four, rate hikes by the Federal Reserve this year.
Towards a first rate hike in March
In his remarks sent to parliamentarians before his confirmation hearing before a Senate committee, scheduled for 4 p.m., Lael Brainard, candidate for the post of vice-chairman of the Federal Reserve, recalls that monetary policy focuses “ bring inflation back to 2% while ensuring a recovery that includes everyone. This is our most important task “. Lael Brainard is considered more dove than Jerome Powell when it comes to monetary policy.
St. Louis Fed President James Bullard told the wall street journal that four rate hikes could be justified this year to contain inflation. Patrick Harker, his counterpart at the Philadelphia branch, said in the FinancialTimes that he would support more than three rate hikes this year if inflation continues to rise and said he favored a first hike in March. Cleveland Fed President Loretta Mester, Raphael Bostic (Atlanta) and Esther George (Kansas City) also came out in favor of a rate hike in March.
Renault ahead of its cost reduction plan
Biggest increase in the Cac 40, Renault increased by 5.8%. In 2021, the manufacturer achieved its objectives of reducing fixed costs and reducing the breakeven point by 30%, necessary to return to financial equilibrium, two years in advance, said CEO Luca de Meo. The automobile Stoxx 600 also gained 1.8%. Stellantis takes 3.3% and Faurecia 4.9%. Citi reiterated its buy view on the OEM, while lowering its operating profit estimate by around 10% for 2022 due to rising costs. The broker, however, remains convinced that the recovery in volumes will be strong and that the restocking should strengthen the momentum of profits in the second half.
Conversely, the luxury sector is at the back of the pack, apparently weakened by the multiplication of infections with the Omicron variant in the city of Tianjin in China, which is home to the country’s second port, located at the gates of Beijing. Kering down 3%, LVMH by 2.6% and L’Oreal by 2.8%.
SopraSteria star of the day
Sopra Steria advance of 7%. The specialist in digital services and software publishing has raised its forecasts for the year 2021, ahead of the publication of its detailed results on February 24. He also announced that Vincent Paris had wished to be “relieved” of his duties as CEO for family reasons and that the board of directors had chosen Cyril Malargé, current chief operating officer, to succeed him as of March 1.
Soitec rises 5.8% while Credit Suisse has started monitoring the stock with an “outperformance” recommendation to target 304 euros.
STMicroelectronics follows with a 3.5% gain as TSMC unveiled better-than-expected guidance for the first quarter. Helped by strong demand for the new iPhone and chips for different industries, the Taiwanese group expects a turnover of between 16.6 and 17.2 billion dollars, at least 5% higher than the average. analysts’ estimates.
Derichebourg takes 1.6% The group has announced that it has won nine contracts for the collection of household waste and urban cleaning in France representing a cumulative turnover of 350 million euros.