This Wednesday morning, the Paris Stock Exchange quietly established itself in a green place, driven by a fairly good resistance on Wall Street the day before, when the first exchanges were sharply reduced, but trading volumes are weak, just over 700 million euros. , pending the publication at 2:30 p.m. of long-awaited inflation in the United States in April. The consensus is optimistic. According to Bloomberg, inflation is forecast at 8.1% in one year last month after a 40-year peak of 8.5% in March, which will ease the pressure on the US Federal Reserve. . The decline in daily COVID-19 cases in Shanghai and Beijing is another element of support in anticipation of this statistical release of the day.
In the middle of the morning Cac 40 rose by 2% to 6239.02 points. In New York, optimism is also appropriate. Futures contracts on major indexes range from 0.8% to 1.3%.
Three reasons to fear a recession
Can the Fed lower inflation without causing a recession, ie by achieving a so-called soft landing? This question, in particular, was posed by Schroeders, with the first element of the answer: Past experience shows that the recessions of the 1980s and 1990s followed the resumption of inflation, similar to what we are experiencing today. Although there has been much talk of achieving a soft landing during these two periods, this is not the case. “.
For the research bureau, there are three reasons why there is a high probability of a recession today: Inflation is taking root; monetary policy operates with long and variable delays; The current context is complicated by the already global slowdown, particularly in Europe due to the war in Ukraine, while rising commodity prices act as a consumption tax and zero-Covid policies are killing the Chinese economy. “.
Covid cases are declining in China
Inflation was also on the agenda in China and Germany. In the first country, the producer price index rose 8% more than expected by 7.7% in one year in April. Over the year, consumer prices rose by 2.1% against expectations + 1.9%. However, on Wednesday, Chinese stocks were in the “green” direction, as evidenced by data showing that the number of daily viral infections is falling in Beijing and Shanghai, where restrictions may be lifted very soon. In Germany, inflation was confirmed at 7.8% for the year in April.
Among several other appointments of the day that are likely to fade into the background, we will learn at the end of the morning about the new growth forecasts of the European Commission and the weekly oil reserves in the United States.
Bluebell calls for change in Saint-Gobain
From the business side, Alstom has raised its synergy target for the acquisition of Bombardier Transportation after adjusting for net loss at the end of the 2021-2022 fiscal year due to the impairment of its stake in Russia’s Transmashholding. The manufacturer of railway equipment expects to receive 400 million euros of synergy related to the acquisition of Bombardier Transport in 2024-2025. Meanwhile, in the second half of last year, the group returned to a positive cash position. The Group does not feel the need to continue to increase capital. The stock lost 5% not without jumping more than 8% on the first exchanges, analysts seem to be disappointed with several signs for this financial year 2022-2023.
An activist of the Bluebell Capital Partners fund called Saint-Gobain (+ 0.6%) to change his business and replace the president to counter what he calls a “disappointing result”, the Financial Times reported on Wednesday.
Eiffage (+ 0.4%) confirmed its forecast after a 10% increase in activity in the first quarter. In February, Eiffage aimed to slightly increase its construction and public works activities in 2002 and increase concessions more steadily, with results expected to improve in two divisions.