Another good inflation number in the US, but the Cac 40 index remained pinned to the Sanofi blood pressure monitor, market news

A drop of almost 14% to the lowest level during this session, a fall of 20% in just three days, or the disappearance of more than 20 billion euros in market capitalization into thin air, it’s been a long time since Cac 40 has never seen it. I had such a disappointment … and this is more detrimental to the French market since it is one of the heavyweights in the rating we are talking about, Sanofi, in fifth place in terms of capitalization.

At the root of this real disaster is the announcement on Tuesday that recruitment is being suspended on a global scale as part of trials of the drug tolebrutinib in multiple sclerosis. This led the UBS Research Office to immediately review the case and decide not to be a buyer of the stock. A warning that went unnoticed, investors seem to remember, from the broker’s arguments, that Sanofi will soon have to face lawsuits in several US courts (including an Illinois court as of August 22, according to Deutsche Bank), regarding claims that the device drug Gastrointestinal Zantac can lead to several forms of cancer or other conditions. The Food and Drug Administration (FDA, the US health authorities) had requested, at the beginning of April 2020, to withdraw the drug from the market, noting that one of its ingredients, ranitidine hydrochloride, led, after taking it, to the presence of the carcinogen NDMA in the body.

Tens of thousands of plaintiffs?

At the beginning of the year, 3,100 people sued Sanofi, but there could be tens of thousands if the first ruling in Illinois proves in favor of the plaintiffs. “, expect for its part on Thursday this Thursday Oddo BHF, which judges as much” This number was overestimated because the evidence for long-term use of the drug does not seem clear to justify (take Zantac at least once a week for a year before the cancer appeared). »

After this real drop in the stock market, buying (cheap if the risk is already too high) enabled Sanofi to end the session with a limited drop of 3.3%. But what weighs CAC 40, which ends with it, only in a slight increase of 0.33%, to 6544.67 points, with a volume of exchanges of 3.1 billion euros.

Reassure US producer prices

It is impossible, under these conditions, to participate in the American party, as the main indicators continue to rise (+0.7%) after significant gains the previous day, following new reassuring figures in terms of inflation. Like yesterday, when consumer prices turned out to be more permissive than analysts expected (8.5% in one year, vs. 8.7% expected and 9.1% the month prior), retail price production increased only 9.8% in one year in July across the Atlantic. . , lower than the expected 10.4% and 11.3% in June. It decreased in one month, by 0.5%, while a slight increase of 0.2% was targeted. Excluding volatile elements (energy and food), the rise was twice less than expected (0.2% vs. 0.4%). Over the course of a year, producer inflation came in at 7.6% versus 7.7% expected.

For Peter Bokfar of Bleakley Financial Group, “ This statistic tells us that the peak of inflation we’ve been talking about for some time seems to have arrived. Everything is to be known now to what extent it will continue to moderate and at what pace. »

Double date in September

At Pimco we are also staying alert regarding the good July consumer price numbers. With lower energy prices, June is likely to mark the peak year-on-year inflationNote their economists, Tiffany Wilding and Alison Boxer. However, year-over-year core inflation is likely to pick up in August, and is unlikely to peak until September. Because the ingredients behind the calm in July in essence – Air tickets and hotels – tend to be more volatile, while the most ‘entrenched’ ones (rents/owner equivalent rent) have remained constant, at 5.5% and 3.5% respectively over one year for 2022 and 2023. »

Thus, the September double date for the FOMC and August consumer prices, which will be presented just before this meeting… Pimco continues to forecast a 0.75 point hike in key interest rates next month, given core inflation remains flat.

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