If the macroeconomic program was sparse at the start of the week, it accelerates this Friday for the last session of June and the second quarter. Inflation is in the spotlight on the Old Continent with the first estimates for June in France, Spain and Italy. The harmonized consumer price index increased by 2.5% over one year in France, in line with expectations, down slightly after 2.6% in May, INSEE indicated. But it is towards the United States that all eyes will be focused.
At 2:30 p.m., the Labor Department’s Bureau of Statistics will publish data on U.S. household income and consumption in May, as well as the Federal Reserve’s most closely watched inflation measure. The underlying index is forecast to post an annual rate of 2.6%, down 2 percentage points since April. This would be its lowest level since March 2021. Financial markets estimate a more than 60% probability that a first rate cut will occur in September, according to the FedWatch gauge developed by CME Group. But beware, ” If core PCE inflation turns out to be higher than the 2.6% expected and after the upside inflation surprises in Canada and Australia, this would fuel fears of a disinflationary trend that has bottomed out globally “, notes Tony Sycamore, analyst at IG.
China’s beauty market is stalling
The CAC 40 lost 0.47% to 7,495.3 points around 10 a.m., affected by the decline of L’Oréal. The number one in the cosmetics industry lost nearly 3%, after having already suffered the day before, at the end of the session, from the comments made by its CEO, who, during an event organized by JPMorgan in Paris, revised downwards his growth forecasts for the global beauty market for 2024, bringing them down to 4.5%-5%, against a previous forecast of 5%, because of the stagnation of the Chinese market, reports the Bloomberg agency, citing a spokesperson for the company.
Antin gained 6.7% following Citi’s upgrade from “neutral” to “buy” while Air France-KLM lost 4.6% in reaction to Barclays’ downgrade from “overweight” to “in line weight”, citing political instability in France.
Even though the sell-off on the euro and French bonds has subsided, investors remain worried about the outcome of the legislative elections, the first round of which takes place this Sunday. Several observers have warned that the budget proposals of the left-wing alliance and the far-right, respectively second and first in the polls, could trigger a market crisis “à la Liz Truss” (named after the former British Prime Minister, whose budget project had panicked the markets and led to her resignation after 45 days, editor’s note). In the best-case scenario, a technical government would be ” tinkered “, estimates Andrew Kenningham of Capital Economics, where the National Rally and the New Popular Front would significantly reduce their programs when faced with the reality of forming a government. And even then, the gap between French and German yields will remain higher than before the dissolution of the National Assembly, continued the chief economist.
Demand is not there for Nike
A slightly positive opening is shaping up on Wall Street. Nike fell more than 12% in after-hours trading yesterday after reporting revenue and guidance that missed analysts’ projections. The company sees sales down 10% this quarter and expects a single-digit decline for the fiscal year that began this month. Analysts had expected growth of about 2% this year. Following the world’s leading sports apparel and equipment maker, Foot Locker, Under Armour and Lululemon have all declined.
