The fall on the Paris Stock Exchange did not weaken this Thursday afternoon despite the lower than expected figures for producer prices in the United States, which confirm the easing of tensions highlighted by the evolution of prices at consumption yesterday.
Between April and May, the PPI index contracted by 0.2%, the lowest since October. A surprise when the market was banking on an increase of 0.1%. On one, the price increase is 2.2% against 2.5% anticipated. Excluding food and energy, the index core stagnated on a monthly basis and increased by 2.3% on an annual basis, less than the 0.3% and 2.5% given by the Bloomberg consensus. “ We now estimate that the core PCE price index deflator increased by only 0.11% month-on-month in May, which would bring the annual rate down from 2.8% to 2.6%. », says Paul Ashworth of Capital Economics.
Even if US inflation and economic growth are weakening, the pace is too slow to convince the Federal Reserve to ease its restrictive policy. This is the lesson from the Fed meeting on Tuesday and Wednesday. Due to this imprecise picture, the central bank now only anticipates one rate cut in 2024, compared to the three planned last March. “ It will likely take longer to gain the confidence we need to ease the policy “, Fed Chairman Jerome Powell said last night. But there is clearly a debate within the central bank’s decision-making body, which has 19 members: four people do not see the Fed funds rate moving all year, seven support an easing of 25 points of base and eight others of 50 points, to which Jerome Powell argues that either option is ” plausible » depending on the content of future economic data.
“ The Fed’s finding of ‘modest progress’ toward the 2% inflation target is likely due to disinflationary signals from May’s CPI data, which contrast with the higher-than-expected first quarter numbers, wrote in a note Whitney Watson, at Goldman Sachs Asset Management. However, the median projection of the dot plot has taken a ‘hawkish’ turn, (…) The Fed’s path to a rate cut depends on whether inflation continues to ease and the labor market continues to rebalance “.
Insufficient taxation
Around 3:45 p.m., the Cac 40 lost 1.3% to 7,758.3 points in a business volume of 1.3 billion euros.
The European automotive sector posted one of the biggest declines of the day (-1.9%). The European Commission announced on Wednesday the imposition of additional customs duties of up to 38% on electric cars shipped from China to the EU. Brussels considers the significant subsidies that manufacturers based there benefit from to be anti-competitive. But many observers believe, on the one hand, that Beijing could retaliate and, on the other hand, that this surcharge is not enough to really hamper the sales growth of the new Chinese giants, such as BYD. “ Even though Chinese electric vehicle brands sell their cars in Europe at a price 50% higher than (their domestic prices), they remain very competitive said Yale Zhang, managing director of consulting firm Automotive Foresight. “ BYD is the only player we believe could still break even on an import model thanks to its structural cost advantage ”, according to Bernstein analysts. This measure also affects certain Western groups present in China, such as BMW (down 1.5%) and Renault (-1.8%). Stellantis fell 2%.
Ahead of its investor day in Michigan, the group led by Carlos Tavares confirmed its objectives for the current year, including an operating margin of 10% to 11% in the first half with industrial cash flow significantly lower than that from the same period of the previous year. An improvement in free cash flow is expected for the second half.
In New York, where the indices oscillate between -0.4% for the Dow Jones and +0.7% for the Nasdaq, Broadcom climbs 13.5%, the electronic chip manufacturer having published quarterly results above the expectations and announced a 10-for-1 split in the nominal value of its shares.
