The Paris Stock Exchange gained slightly on Tuesday, lining up a fifth session of increases in a row, pending its appointments with the players in the American distribution this afternoon. In the middle of the day, the Cac 40 advances by 0.22%, to 6,584.36 points, in a meager trading volume of 525 million euros.
It nevertheless downgraded to the publication, at 11 a.m., of the ZEW index of investor sentiment in Germany, which deteriorated a little more than expected in August, to -55.3 points, against -52.7 points expected by the consensus. This fuels the scenario of a slowdown in economic growth across the Rhine, already weak, the business survey adding that high inflation and the expected further increase in energy bills should weigh on consumption.
Inevitable recession in Germany
” German economic activity was flat in the second quarter, although most of the eurozone expanded quite rapidly with the boost of post-pandemic reopening. We believe German GDP will inevitably contract over the next three quarters as headwinds from rising energy prices and interest rates intensify », Analysis For Andrew Kenningham, of Capital Economics.
Yesterday, the American places gained a few fractions, the sharp deterioration of the Empire State index of the New York Fed (-31.3 points in August, against +5 expected and +11.1 in July) having revived the hope that the Federal Reserve will be more lenient in its next monetary policy decision next month. But inflation has, here too, well and truly entered the heart of households and businesses in the United States. At 8.5%, it remains close to its peak of 9.1% in June. We will certainly have further proof of this this afternoon with the publication of the quarterly accounts of walmart and of Home Depot.
Loss of purchasing power
If the world’s number one retailer issued a warning on its annual forecasts at the end of July, weighed down by the loss of consumer purchasing power, it should confirm on Tuesday that inflation continues to push up costs and that both retailers and suppliers negotiate fiercely to set adequate price levels that can preserve their margins without scaring away customers, at the risk of leaving the shelves empty in the event of failure.
As for food, which is central to household consumption, prices soared again by nearly 11% in July in the United States over one year. A sharp increase, of course, but which masks, for example, the jump of 38% for those of eggs, more than 20% for coffee, 18% for meat or even 13% for… peanut butter. What create incomprehension, even anger, of consumers. According to a recent study conducted by Deloitte, 56% of Americans believe that companies raise their prices more than necessary to increase their profits. President Joe Biden’s administration has also blamed meat and energy producers for their pricing policy. In the United Kingdom, food prices are at their highest since 2008, revealed on Tuesday a survey by the Kantar Institute.
To be continued, therefore, in-depth comments from Walmart, before those, also scheduled this week, from Target. He too had warned on his margins last month.
Bank of America more optimistic
Analysts at Bank of America Securities want to be optimistic. Of the 37 leading indicators they track, such as the percentage of clothes sold on the Internet, almost half clearly argue for a moderation in price increases around the world. 24% of them send a neutral signal. The proportion of bullish indicators fell to 27%, from around 80% in May 2021 and 50% in March.
On the business side, Eramet rose by 4.6%, the biggest rise in the SRD. The mining group BHP Billiton posted the biggest profit in its history at the end of June and will pay a record dividend. ArcelorMittal earn 2%.
In commodities, the barrel of Brent is relatively stable, at 94 dollars, after its sharp drop the day before. Iran responded on Monday to the European Union’s “definitive” text, aimed at reviving the 2015 Iran nuclear deal, a European official said. This maintains the prospect of a return of Iranian crude to the market.