The big economic meeting of the week did not bring much welcome calm, so much so that the Paris Stock Exchange experienced another very volatile session on Wednesday. However, despite much panic caused by the release of the latest US inflation data at 14:30, the Cac 40 (falling to +0.3% after the release) managed to close up 2.5% to 6,269.73 points. .
In April, in the world’s largest economy, consumer prices (CPI) rose by 8.3% yoy, which certainly indicates a slowdown in growth compared to +8.5% in March, but this slowdown is mainly due to more favorable base effect is less pronounced than expected by economists (+8.1%), and remains at the level of 40-year highs.
With gasoline accounting for the bulk of the decline in monthly inflation, the slowdown recorded by the CPI is likely temporary as gas station prices bounced back to around $4,161 a gallon earlier in the week after falling below $4 in April. according to the US Energy Information Agency.
Airfare prices are higher than before the crisis
And perhaps more worrisome about this latest data is that core inflation, that is, excluding energy and food, rose 0.6% on the month after rising 0.3% in March. “The 0.6% increase was stronger than expected.says Andrew Hunter of Capital Economics. This partly reflects a record 18.6% rise in airfare prices on the back of a recovery in travel demand, with hotel rates also rising again. Airfare prices have risen nearly 40% over the past three months and are now about 10% above pre-pandemic levels. This is a rebound in prices, exacerbated by a rise in the price of kerosene. »
However, despite this unpleasant surprise, the stock market is still hoping that the peak of inflation is already behind us. In the secondary debt market, the rate of ten-year US sovereign bonds, which, according to the publication of statistics, rebounded above 3%, at the close of European markets is changing slightly below this mark. threshold.
Inflation figures, according to the global financial community, are in the direction of the Fed continuing to raise the US base interest rate by 50 basis points. But as economist Andrew Hunter points out, a weaker-than-expected slowdown in prices could still re-ignite rumors of a 75 basis point hike or even a surprise rise between policy meetings.
“Everything is on the table”
Representatives of several central banks spoke yesterday, including Loretta Mester, head of the Cleveland branch of the Fed, which is participating in the vote this year. She said a 75 basis point rate hike could not be ruled out. Atlanta Fed President Rafael Bostic also left the door open for a raise of this magnitude, saying ” everything is on the table while indicating that he prefers a 50 basis point increase for the next two or three meetings.
Inflation was also on the agenda in China and Germany. In the first country, the producer price index rose by 8%, compared with 7.7% expected for a single year in April. Consumer prices for the year rose by 2.1% against the expected +1.9%. Chinese stocks remained positive on Wednesday, supported by data showing daily virus infections are declining in both Beijing and Shanghai, where restrictions could be lifted very soon. In Germany, inflation was confirmed at 7.8% y/y in April.
Alstom first rose 9% and then fell 11%.
Ultimately, the Cac 40, which fell to a two-month low on Monday, continued its rebound today, helped by the rise in luxury stocks, which were at their lowest level in a year at the very beginning of the week. Loreal and LVMX added more than 4% today, being on the podium of the best players in the index.
Vice versa, Alstom ended 5% lower as shares of the train maker rose 9% in early trading. What was said during Q4 2021-2022 reporting for Alstom to fall to 11%? Initially, the stock exchange very warmly welcomed “a real nice surprise on free cash flow » the second half of the year came out better than expected (469 million euros against 215 million expected by consensus), according to analysts Delphine Bro and Quentin Bori for private bank Oddo BHF. But during a telephone meeting, the mood changed dramatically. Analyst James Moore at Redburn says management limited itself to comparing free cash flow in the second half to the same period last year, refusing to answer questions from the financial community about the factors that allowed it to increase from one semester to the next. He explained that the management’s proposal to bring offline clarification “did not promote investor confidence. »