(BFM Bourse) – The PCE index, the American Federal Reserve’s preferred measure of inflation, was in line with expectations. But political risk, before the first round of legislative elections on Sunday, prevented the Paris Stock Exchange from benefiting. The CAC lost 0.68% this Friday and 1.96% over the week.
The Paris Stock Exchange ended the week on a bad note. The CAC 40 lost 0.68% this Friday to 7479.40 points. Over the whole week, the Parisian index returned 1.96%.
With this bad week, the Paris index ends the first part of the year in the red, with a drop of 0.85% since January 1. According to AFP, the CAC 40 posted its worst monthly performance in June for two years, with a drop of 6.42%.
The market avoided risk-taking on French assets ahead of the first round of legislative elections on Sunday. The CAC 40 thus significantly underperformed the other major European indices on Friday.
Furthermore, a renewed tension is observed on the French debt. The yield gap between the 10-year French bond and the German bond of the same maturity, a thermometer of tensions on the French signature, reached 84 points (0.84 percentage points) during the day, at most high since 2012, falling to 81 points at the end of the day.
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Air France-KLM and L’Oréal in trouble
“Market questions regarding budgetary balances, but also future economic measures, continue to put pressure on French assets,” judges Xavier Chapard of LBPAM. “At this stage, the markets are far from anticipating a worst-case scenario (in terms of budgetary slippage and tensions with the European authorities),” he adds, however.
This context prevented the Parisian market from limiting its losses after the publication of the PCE index, the preferred gauge of the American Federal Reserve (Fed) to measure inflation.
The core PCE index, i.e. excluding food and energy prices, rose by 2.6% over one year in May, after 2.8% in April, and exactly in line with economists’ expectations.
These figures are considered “reassuring” by Bastien Drut of CPR AM, and should push the Fed “to focus more on the labor market, and a little less on inflation.”
On the value side, L’Oréal lost 3% after its general director, Nicolas Hieronimus, announced a lowering of the outlook for the beauty market on Thursday, according to comments reported by Bloomberg.
Air France-KLM lost 4.2%, penalized by a lowering of advice from Barclays which went from “overweighting” to “online weighting” on the value.
On other markets, the euro gained 0.1% against the euro to $1.0718. Oil fell slightly. The September contract on North Sea Brent fell 0.3% to $84.99 a barrel, while the August contract on WTI listed in New York gained 0.3% to $81.47 a barrel.
Julien Marion – ©2024 BFM Bourse
