What do you mean, no inflation peak in Europe before 2023? The stock market in the red

The Paris Stock Exchange remains anchored in the red in the middle of the afternoon and begins to abandon the hope of being able to align a seventh week of increase in a row. He absolutely has to finish in the green. The Cac 40 lost 0.57%, to 6,518.14 points, in a trading volume of 1.3 billion euros. In New York too there is talk of withdrawal. the Dow Jones gives up 0.53%, the S&P500 loose 0.82% and the Nasdaq Composite 1.32%.

Operators are plagued by inflation that does not want to dry up in Europe, where the rise in producer prices, for example, far exceeded expectations in July in Germany. They soared by 37.2% over one year and 5.3% over one month. This is the largest increase observed by the Federal Statistical Office since studies began in 1949. On the wholesale market in the country, the price of electricity is at a new peak of more than 550 euros on megawatt hour maturing in 1 year.

No inflation peak before 2023?

The outlook for inflation in the euro zone has not improved since the rate hike in July, said Isabel Schnabel, member of the executive board of the European Central Bank, yesterday morning. Enough to fuel the suspense about an increase of 25 or 50 basis points in the refi at the next meeting in September, a new turn of the screw, after that of 0.5 point in July, seeming acquired. ” I would not rule out that in the short term inflation will continue to rise. These inflationary pressures are likely to be present for some time, they will not disappear quickly “Admitted Isabel Schnabel. BlueBay Asset Management expects inflation to rise to 15% in the UK, with a peak which, overall in Europe, will not be reached before the start of next year.

A more aggressive attitude from the ECB which would be bad news, as the growing risks of seeing the euro zone enter into recession are emerging. ” Shortages of materials and labor are weighing on the construction sector and, while these headwinds may ease over the remainder of the year, tighter monetary policy is expected to accentuate the decline in activity, estimates the firm Capital Economics. The latest surveys confirm that the sector is expected to reduce Eurozone GDP by around 0.25% in the third quarter, and the worst could be yet to come. »

US real estate in near recession

German economic activity was flat in the second quarter as the bulk of eurozone countries grew 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 “, wrote the same research office a little earlier in the week. Germany accounts for over 30% of eurozone GDP.

The same is true in the United States, moreover, where real estate is already in a situation of near-recession. Sales of existing homes, published yesterday afternoon, fell another 6% from June to July, a drop of 20% in one year. Real estate resales are at their lowest since May 2020.

Prospects for inflation which weigh in particular on property companies in Paris. Covivio, Icade, Klepierre, Unibail-Rodamco-Westfield, Gecina and Carmila are all down this Friday.

Banks and large industrialists are also among the strongest declines of the session. ArcelorMittal loses 3.3%, Renault and Stellantis more than 2%, Airbus 1.3%, BNP Paribas and Societe Generale around 2.7%, in view of the growing difficulties in granting loans and the risk of business failure in a period of recession. In contrast, TotalEnergies gained 0.6%, driven by the theme of energy prices.

Thriller in Jackson Hole

The next major event is undoubtedly the Jackson Hole symposium, the annual American gathering of the most influential fundraisers on the planet. It will be August 26, the date has been confirmed by the US Federal Reserve.

There too, suspense, some believing that this could be the occasion for the president of the central bank, Jerome Powell, to raise his voice, even if the publications of the inflation and employment figures for the month of August will undoubtedly constitute the most decisive elements of the decision of the institution’s monetary policy committee during its September session.

Source link -91