The Paris of Paris is standing still this Monday, a fairly light day in terms of company results but rich in data on inflation in Europe. Logically, the market is not showing any reaction to the expected acceleration of consumer prices in Germany. The CPI index harmonized with European standards increased by 2.4% over one year in April, after +2.3% the previous month. Energy has been one of the main drivers of small recovery.
A similar dynamic was observed in Spain in the morning, with an acceleration to 3.4% after the government continued to remove aid that helped contain soaring energy costs. Data for the entire euro zone, due on Tuesday, is expected to show the overall figure at 2.4%, unchanged for the first time this year. But there should be a further easing of underlying tensions.
Christine Lagarde, the president of the European Central Bank, warned during the last meeting that inflation would fluctuate in the coming months due to base effects. A rebound in inflation, as long as it does not deviate from estimates, should therefore not prevent the ECB from reducing its rates in June, as is widely anticipated. The uncertainty is more about what she will decide next. Franziska Palmas of ING considers further relaxations very likely but their extent will depend on the degree of disinflation in services.
Around 3:45 p.m., the Cac 40 was stable at 8,188.5 points in a business volume of 920 million euros.
There is still a long way to go before the Fed regains confidence
American indices gain around 0.35%. Tesla is up more than 12%, the electric car manufacturer having taken an important step to introduce its driver assistance system in China. Apple, one of the big names to publish its financial accounts this week, rose 3.5% thanks to Bernstein’s move to “outperformance”. McDonald’s, Coca-Cola and Amazon are also among the major companies reporting their quarterly results in the coming days.
The main monetary event of the week obviously remains the two-day Fed meeting. It will end on Wednesday, while European markets will be closed for Labor Day. But investors will still follow the statements of the president of the institution, Jerome Powell, regarding the central bank’s rate outlook. And a hawkish tone is more than expected from him with the confirmation of the tenacity of inflation in recent months.
“ With all measures of consumer prices showing a sharp acceleration over the past three or four months, the FOMC is bound to reverse its earlier predictions of significant rate easing this year, wrote Societe Generale economists in a note addressed to clients. That said, markets have already significantly reduced their rate cut expectations, so unless Chairman Powell raises the possibility of a hike, the impact on the market should be modest.. » A first relaxation is not anticipated before September, compared to June only a few weeks ago, for a little more than 30 basis points of easing in total this year.
The State helps Atos, Philips settles its complaints in the United States
On the business side, Atos is up 24% following the announcement by the Minister of the Economy yesterday of a takeover offer made to the IT group so that the State can buy back its so-called “sovereign” activities of systems useful for deterrence , army commands and intelligence services. The newspaper Les Echos cites a price of around 750 to 900 million euros, according to its sources.
In Amsterdam, Philips took off 34% after a $1.1 billion agreement in the United States to settle disputes concerning personal injuries linked to its sleep apnea respirators. A colossal amount, certainly, but lower than market fears.
Porsche fell 3.8% in Frankfurt after delivering, on Friday after the market closed, the worst quarterly results since its IPO at the end of September 2022.
