Another good inflation number in the United States, but the Cac 40 remained riveted to Sanofi’s blood pressure monitor
A nearly 14% drop to this session’s low, a 20% plunge in just three days, or more than $25 billion in market cap all gone, it’s been a long time since a Cac company hasn’t had 40 experienced such a disappointment… This is all the more detrimental for the French market as it is one of the heavyweights of the rating we are talking about, Sanofi, in fifth place by capitalization.
The starting point of this real catastrophe was Tuesday’s announcement of the suspension of recruitment at global level in the framework of the studies carried out with its drug tolebrutinib in multiple sclerosis. This prompted the UBS Research Office to immediately review the case and decide to no longer be a buyer of the stock. A warning that has not gone unnoticed, and investors seem to remember from the broker’s arguments that Sanofi will soon face lawsuits in several American courts (including that of Illinois from this August 22, according to Deutsche Bank) for claims will be that the gastrointestinal drug Zantac could lead to several forms of cancer or other diseases. The Food and Drug Administration (FDA) had applied in early April 2020 to withdraw the drug from the market on the grounds that one of its ingredients, ranitidine hydrochloride, could lead to the presence of an NDMA carcinogen in the body after ingestion.
Tens of thousands of plaintiffs?
” Earlier this year, 3,100 people had sued Sanofi, but it could be tens of thousands if the initial Illinois verdict goes in favor of the plaintiffs. “ for his part, this Thursday expects Oddo BHF, who judges so far “ this number is overestimated because evidence does not seem so obvious to justify long-term use of the drug (take Zantac at least once a week for a year before onset of cancer). »
After this real plunge in the stock market, buying (cheap if the risk is indeed overblown) allowed Sanofi to end the session with a limited 3.3% drop. However, this weighs on the Cac 40, which ends it, only with a small increase of 0.33%, to 6,544.67 points, in a trading volume of 3.1 billion euros.
Soothing producer prices in the United States
Impossible to take part in the American party in these conditions, where the main indices continue to rise (+0.7%) after a significant gain the day before on the back of new reassuring inflation numbers. As yesterday when consumer prices proved softer than analysts had expected (8.5% over the year vs. 8.7% exp. and 9.1% the previous month), production retail prices rose just 9 across the Atlantic in July .8% over one year, below 10.4% expected and 11.3% in June. They are down 0.5% for the month, targeting a slight 0.2% rise. Excluding volatile elements (energy and food), the increase was twice as small as expected (0.2% vs. 0.4%). For the year, producer inflation came in at 7.6% versus 7.7% expected.
For Peter Boockvar of Bleakley Financial Group ” This stat tells us that the peak inflation we’ve been talking about for some time seems to be here. The whole thing should now know to what extent it will continue to moderate and at what pace. »
Double appointment in September
Also at Pimco, we remain vigilant on the strong consumer price numbers for July. With falling energy prices June probably marks the peak of the headline inflation rate year-on-yearnote their economists Tiffany Wilding and Allison Boxer. However, the annual rate of core inflation is likely to accelerate again in August and will not peak until September. Because the components behind the July doldrums in Vein – Airfares and hotels – tended to be more volatile while the more fixed ones (rents/owner equivalent rents) remained stable, at 5.5% and 3.5% over a year for 2022 and 2023 respectively. »
Double date in September hence for Fed FOMC and August consumer prices to be presented just before this meeting… Pimco still expects interest rates to rise by 0.75 point next month given the continued stability of core inflation.