(BFM Bourse) – The Paris Bourse welcomes good news. With no direction as of 2:30 p.m., the CAC 40 immediately rebounded to 6,500 points in reaction to lower-than-feared inflation numbers in the United States in July.
The Paris Stock Exchange tumbled into early afternoon, accelerating its uptrend after announcing slowing US inflation in July. The CAC 40 almost made up for the previous day’s losses (-0.53%) with a plus of 0.52% and closed at 6,523.44 points after a daily high of 6,545.64 points (+0.84%). The rebound in the Paris Index would have been stronger had Sanofi not bounced back more than 8.2%, which is still struggling after halting recruitment for its multiple sclerosis drug trials.
Believing that inflation has peaked, markets are now hoping that the Fed will be tempted to soften its position on interest rates at its September policy meeting.
On Wall Street, wait-and-see attitude gave way to euphoria as major indices rallied in unison the day after a difficult session after warnings of rapid selling by semiconductor makers. European equity markets ended with the Dow Jones up 1.70%, the S&P 500 up 1.9% and the Nasdaq – which is more sensitive to the direction of interest rates – rallied 2.5%.
Inflation slowed more-than-expected in the United States in July as lower pump prices dampened overall price growth. Contrary to expectations, consumer prices held steady between June and July, where the consensus was for a 0.2% increase over the month. On an annualized basis, inflation slowed to 8.5% versus an 8.7% price increase that markets had expected. Joe Biden on Wednesday hailed “signs that inflation may be beginning to ease after a 40-year high of 9.1% last June.” “Today we found out that our economy had 0% inflation in July,” even Joe Biden rejoiced.
Adjusted for food and energy prices, the basic price index rose 0.3% last month and 5.9% year-on-year amid fears of a rise to 6.1% then feared by investors in June.
Immediately after the stats were released, the likelihood of another 0.75 percentage point rate hike by the Fed in September dropped to 34% from just under 70% on Tuesday. The market is now betting on a half a percentage point hike after the next Fed meeting in September. The greenback fell, the European currency was quoted at 1.0341 dollars (+ 1.24%).
On the business side, news is still scarce. Eutelsat gained 3.9% after shipping company CMA CGM announced on August 5 that it had passed the 5% threshold of Eutelsat’s capital and voting rights and owned 5.03% of the French satellite operator.
However, the award for the biggest increase of the day goes to Alstom (+6.1%), followed by Atos (+5.1%) and SMCP (4.8%).
EDF ended slightly down 0.2%, the energy company filed a lawsuit with the Council of State today and a lawsuit for damages estimated to date at €8.34 billion with the Council of State.
At the bottom of the CAC is Sanofi (-8.2%), which continues to be penalized by the suspension of recruitment at a global level for studies conducted with its drug tolebrutinib in multiple sclerosis.
Poujoulat ended the session on a balanced note, the Deux-Sèvres-based group recorded growth of 34% in the first quarter of its 2022-2023 financial year, thanks to consumer demand for wood energy installations and market renewal
Oil prices remain on the downtrend, weighed down by a possible return of Iranian crude to the market as the nuclear deal is negotiated and last week’s announcement of an increase in US inventories. A barrel of North Sea Brent fell 1% to $95.58, while the WTI fell 0.9% to $89.85.
Sabrina Sadgui – ©2022 BFM Stock Exchange