The Paris Stock Exchange erased most of its losses and futures contracts on American indices rose after the announcement of a slightly stronger acceleration than expected in inflation in the United States, but limited in “core” data. Consumer prices rose by 1.2% in March, as expected, and by 8.5% over one year, unheard of since December 1981 after rising 7.9% in February. The consensus formed by Bloomberg was counting on an increase of 8.4% compared to March 2021. Excluding food and energy, the increase stands at 0.3% over one month, against +0.5% expected by the market.
The yield on the US 10-year bond edged higher to 2.7138% after hitting 2.83% for the first time since the end of 2018. Global financial markets have recently been weakened by fears of a slowdown in growth linked to the war in Ukraine, soaring prices and the more aggressive turn taken by the US Federal Reserve.
At 2:45 p.m., the Bedroom 40 takes 0.22% to 6,570.47 points in a business volume of 1.61 billion euros. The contracts future June on American indices gain between 0.5% for the Dow Jones and 1.6% for Nasdaq 100.
On the Old Continent, consumer prices rose 7.6% year on year in Germany last month, as previously estimated. Also across the Rhine, the economic climate, as perceived by investors and financial analysts, deteriorated again in April. The index established by the Zew Institute contracted by 1.3 points to -41, against -48.5 expected.
Risk of collateral damage to the economy
The markets fear that inflation will remain permanently high while even the most accommodating of the members of the Fed’s monetary policy committee (FOMC) believe that it is necessary to act quickly and strongly to counter the rise in prices. Long considered one of the most dovish in the FOMC, Chicago Fed Chairman Charles Evans said accelerating the pace of rate hikes to fight inflation should be debated.
Fed Governor Christopher Waller meanwhile said the central bank is doing all it can to prevent monetary tightening from stifling growth. Indeed, he described rate hikes as a tool of “ Brute force » which can have the effect of a « hammer » by causing « collateral damages on the economy. For now, the market is anticipating 50 basis point hikes in the fed funds rate during the next two meetings of the Fed’s monetary policy committee.
Recently weakened by containment measures in China, luxury stocks are moving forward in anticipation of an easing of health restrictions in Shanghai. LVMH and Hermes win more than 2%.
Cyclic values also take on colors like Saint Gobain (+1.6%), Renault (+0.8%) and Michelin (+1.4%).
Biggest rise in the Cac 40 on Monday following the announcement of the sale of its banking and insurance activities in Russia, Societe Generale loses 1.4%. In Frankfurt, Deutsche Bank and Commerzbank fell by around 8% after an investor sold more than 5% of the capital of the two banks for a total amount of 1.75 billion euros.
Sanofi fell 2.7% under the effect of profit taking after posting a record the day before.
bioMerieux loose 4.4%. Oddo BHF downgraded the title from “outperforming” to “neutral” after quarterly turnover in line with expectations. The broker notes that the group has confirmed its forecasts despite the risk of a more difficult year 2022 for sales of tests against Covid-19.