The Paris Stock Exchange is quietly docked in the green on Wednesday morning, buoyed by fairly good resistance on Wall Street the day before for a higher opening probability (for now), but volumes are thin, at just over €1 billion, awaiting a publication , at 2.30 pm, US inflation forecast numbers for April. The consensus is optimistic.
Which was compiled by Bloomberg forecast 8.1% one-year inflation last month, after a 40-year peak of 8.5% in March, which should allow some pressure on the Federal Reserve to ease. America in managing its monetary policy. The decline in daily Covid cases in Shanghai and Beijing is another element of support awaiting this statistical release of the day. This benefits luxury stocks, which are heavyweights in the main index. keyringAnd HermesAnd LVMH And L’Oreal It increased from 2.2% to 3.4%.
In the middle of the morning, the CAC 40 index rose 1.8% to 6,228.56 points.
Watch out for another sell-off
For Ipek Ozkardeskaya, at Swissquote, ” A lower level of inflation would be a relief and give the impression that the Fed’s efforts to control inflation are paying off, and therefore need not be more aggressive in order to restart the economy. Inflation is toward its target of 2%. In this case, some 50 basis point hikes and the cut announced on the balance sheet (…) suffice, however, if inflation doesn’t come down as expected – and worse still, if we see a higher number from last month, we’ll see selling Another big move across all assets as this continued rise in inflation relative to actual levels should prompt investors to bet the Fed will raise 75 basis points at the next meeting. »
Can the Federal Reserve reduce inflation without causing a recession, that is, achieving a so-called soft landing? Here is the question posed by Schroders, for his part, with the first response element: Past experience shows that recessions in the 1980s and 1990s followed a rebound in inflation similar to what we are experiencing today. Although there was much talk of achieving a soft landing during these two periods, it was not. “.
For the think tank, there are three reasons why the probability of a recession is high today: hypertrophy takes root; Monetary policy operates with long and variable delays; The current context is made more difficult by the already global slowdown in growth, in Europe in particular with the war in Ukraine, while the rise in commodity prices acts as a consumption tax and ‘zero covid’ policy hurting the Chinese economy. “.
Prices rise in China, but cases of COVID-19 are declining
Inflation was also on the agenda in China and Germany. In the first country, the producer price index rose 8%, topping the 7.7% forecast in one year in April. Consumer prices rose 2.1% in one year versus +1.9% expected. Chinese stocks remain in the green on Wednesday, buoyed by data that the number of daily virus infections is declining in Beijing as in Shanghai, where containment could be lifted very soon. In Germany, inflation was confirmed at 7.8% in one year in April.
Among the few other appointments on the day, which will very likely pass into the background, we will learn at the end of the morning the European Commission’s new growth forecast and US weekly oil inventories.
Alstom does not respond to analyst requests
On the business side, Alstom It raised its target for synergies related to the acquisition of Bombardier Transportation, after an adjusted net loss at the end of the 2021-2022 fiscal year, due to the depreciation of its stake in Russia’s Trans-Machilde. The rail equipment manufacturer expects to generate €400 million in synergies linked to the acquisition of Bombardier Transport in 2024-2025. Meanwhile, the measure lost 8% not without jumping more than 8% on the top exchanges, as analysts were disappointed by the few indicators presented for this 2022-2023 fiscal year. Analysts’ questions about how free cash flow improved between the first and second halves were also not answered.
An activist fund called Bluebell Capital Partners Saint Gobain (+1.9%) to reshape its business and replace its chief to face what it calls “disappointing performance,” the Financial Times reported on Wednesday.
Ifage (+2%) confirmed their forecast after increasing activity by 10% in the first quarter. In February, Eiffage was aiming for a slight increase in construction and public works activity for 2002 and more sustainable growth in concessions, meanwhile, results are expected to improve in the two divisions.