The Paris Stock Exchange ended almost stable on Wednesday but at its lowest level in a month after a session marked by inflation in the United States which removed the hope of seeing a reduction in June rates from the American central bank.
The flagship CAC 40 index fell 3.79 points, ending at 8,045.38 points, its lowest closing level since March 11. On Tuesday, it had already lost 0.86%.
The Parisian stock market was shaken mid-session by the announcement of American inflation, considered by all observers to be decisive for a possible reduction in key rates by the Fed.
Higher than expected – 3.5% over one year in March, compared to 3.2% in February – American inflation shook up the CAC 40, like the rest of the European stock markets: the index even rose again during the session below the 8,000 points mark for the first time in almost a month.
It’s a bit of a rude awakening, comments Florian Ielpo, head of macroeconomic research at Lombard Odier Investment Managers, for whom this new increase marks the end of a phase of linear disinflation, moving on to a phase of chaotic disinflation.
Initially dreamed of in March, then postponed until June, the first reduction in the Fed’s key rates could ultimately take place even later, due to the persistence of inflation and the solidity displayed by the American economy.
The figure is far from the American central bank’s target of 2% over one year and even moves away from the prospect of falling again below 3%, a level that the CPI indicator had reached in June 2023.
If there is still inflation in the system, it is also because the economy is doing well, says the same analyst, for whom the crucial question remains what the Fed will do with these figures.
The report of the discussions of the last monetary policy meeting of the Fed is expected in the second part of the meeting in the United States.
Concerning the ECB meeting on Thursday, investors are not expecting much from the European monetary institution, already generally looking towards June for its first rate cut according to the markets.
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