Relief ‘poof’ in stock markets after lower-than-expected inflation in the United States
That’s a “phew” of relief for the markets. In July, inflation numbers released at 2.30pm and so expected by operators came in lower than consensus expected, prompting the Fed to cut interest rates slightly at its next meeting in September in hopes of an immediate reaction to the rise in major indices treat aggressively.
In July, consumer prices held steady for over a month, less than the 0.2% increase analysts had expected. Annual inflation is just 8.5% versus 8.7% expected and 9.1% in June. Same observation with “core” data, ie excluding volatile elements like food and energy. Prices rose 5.9%, still year-on-year, while fears rose to 6.1%.
Eat for energy?
At around 4:00 p.m., the Cac 40 is up 0.67% after being stable throughout the morning. In New York, the Dow Jones rose 1.58% and the Nasdaq Composite, whose “tech” and growth stocks are most sensitive to rate hikes, rose 2.35%.
” Consumer prices were flat in July and there is a good chance prices will fall significantly in Augustcomments Paul Ashworth of Capital Economics. Gasoline prices fell 7.7%m/m and as crude oil prices continue to fall, they will fall even further by 11% in August. Food prices rose 1.1% last month, continuing a string of very strong increases, but this is the next deflationary decline. »
A little breather for the Fed?
The Analysis Bureau continues: All in all, with headline inflation still at 8.5% and core inflation at 5.9%, it’s still not the significant fall in inflation the Fed is aiming for. But it’s a start and we expect stronger signs of easing price pressures in the coming months. »
The reaction on the futures markets was also prompt fed fund, as calculated by the CME, which is now only 38.5% awaiting the prospect of the Federal Reserve raising interest rates by 75 basis points in September, up from almost 70% this morning. A twist of the screw by 50 basis points is now more likely to be expected with a probability of 61.5%.
Sanofi again a red lantern
“ The market seems reassured that we appear to be past the peak of inflation and should see further declines in the second half of the yearCommonwealth Financial Network management company Judge Brian Price interviewed by CNBC. It looks like the likelihood of another 75 basis point hike by the Fed has fallen significantly after this report and we may only see a 50 basis point hike at the next meeting. If energy prices continue to fall, I expect the inflation data to ease in the coming months. »
Of course, those inflation numbers in the United States were the highlight of the session, eclipsing news from companies that are also very weak. Biggest increase in Cac 40, Alstom up 6%. Vice versa Sanofi shed more than 4%, still weighed down by halted recruitment for trials of its drug tolebrutinib in certain multiple sclerosis and a worsening UBS analysts who have gone into sales.