Cac 40 and Wall Street weighed down by higher-than-expected US inflation, Market News

Inflation in the US became the main macroeconomic event of the week, and for good reason! Consumer prices rose 9.1% year-on-year in June in the United States, the highest level since late 1981, after 8.6% in May, thus beating the most pessimistic forecasts. Excluding food and energy, growth also accelerated to 0.7% in one month and 5.9% in one year, against an expected slowdown to 0.5% and 5.7% respectively. That’s enough to cement the prospect of a 75 basis point hike by the Federal Reserve on July 27 after tightening by the same amount in June.

Around 4 p.m Bedroom 40 fell by 1.50% to 5,953.83 points with a business volume of 1.5 billion euros. In Frankfurt, Dax gives 1.58%. in New York, Dow Jones lost 1.07% and Nasdaq Composite 1.10%.

The 7.5% increase in energy prices compared to the previous month accounts for half of the overall increase, with gasoline prices up 11.2% and natural gas on the grid up 8.2%. The good news is that the drop in gas prices over the past few weeks suggests that this trend will completely reverse this month.predicts Michael Pearce, senior US economist at Capital Economics.

Overall, the statistics confirm that the Fed will raise rates by 75 basis points at its meeting at the end of the month. While some will draw parallels with the very poor readings in May, the context is quite different: commodity prices have fallen sharply and there are increasingly clear signs of a slowing economy, and these two effects will help reduce price pressures. Which should include expectations that Fed officials will choose a 100 basis point rate hike “, he concludes.

The euro briefly falls below $1

In the foreign exchange market, the euro briefly fell below parity at $0.9996 before returning to $1.0015. A pebble in the shoe of the European Central Bank, which has already faced the war in Ukraine and its impact on the prices of energy and other raw materials, and inflation has already reached record levels in the Eurozone.

In the bond market, the yield on the 10-year U.S. Treasury note fell 7 basis points to 3.072%, remaining below the two-year yield of 3.1568%. The spread between the two maturities is the lowest since 2007. Such an inversion of the curve is usually taken as a harbinger of a coming recession. The International Monetary Fund also yesterday lowered its forecast for US GDP growth this year to 2.3%, compared to the 2.9% estimated in June.

EDF is suspended until further notice

EDF requested that trading in its shares be suspended until further notice. The state has announced its intention to acquire the group’s shares, which it does not own, in order to increase the capital to 100%. This is stated in the notification of the Ministry of Finance “The state is currently working on determining the conditions and will specify its intentions to the market no later than July 19, 2022. “.

Financial shares lose ground ahead of the publication of quarterly results of major US banks. BNP Paribas, Agricultural credit, Sausage General and Aksa income from 1.9% to 3.3%.

The automotive sector is also under pressure, with the related Stoxx 600 the second-biggest sector decliner in Europe (-2.7%), trailing leisure travel (-3.8%), and quarterly results Delta Airlines (-6.5% in New York), disappointed. Renault decreased by 2.7%, Stellantis by 2.4% and Faurecia by 4.3%.

in Helsinki, Orion increased by 8.3%, thus signing the biggest increase in the Stoxx 600. The Finnish pharmaceutical group raised its annual forecasts after signing a partnership agreement with Merck to develop a prostate cancer treatment.