‘Whew’ of relief in the stock market after lower-than-expected inflation in the US, market news

This is the “nephew” of convenience for the markets. In July, inflation figures, revealed at 2:30 p.m. that operators had been waiting for, turned out to be lower than expected by consensus, immediately causing a reaction to the rise in key indicators, with the hope that we would see the Fed The Fed is a little less aggressive about its key rates during its next session in September.

In July, consumer prices remained stable over one month, less than the 0.2% rise analysts had expected. Over the course of one year, inflation came in at just 8.5%, versus the 8.7% expected and compared to 9.1% in June. The same observation is made in the “basic” data, i.e. exclusion of volatile elements such as food and energy. Prices rose 5.9%, year on year, while there were fears of a rise to 6.1%.

Image credit: Bloomberg

After energy and food?

At around 4 pm, the Cac 40 was up 0.67% after being flat all morning. In New York, the Dow rose 1.58% and the Nasdaq Composite, whose stocks are “technology” and growth most sensitive to rising interest rates, rose 2.35%.

Consumer prices remained unchanged in July, and there is a good chance that prices will fall directly in Augustcomment by Paul Ashworth of Capital Economics. Gasoline prices are down 7.7% month over month, and with crude oil prices continuing to drop, they are on track to drop further 11% in August. Food prices rose 1.1% last month, extending a series of very strong increases, but this is the next deflationary pullback. »

A short respite for the Fed?

The Analysis Bureau continues: Altogether, with headline inflation still at 8.5% and core inflation at 5.9%, it’s still the unnoticed inflation dip the Fed is looking for. But it’s a start and we expect to see stronger signs of easing price pressures over the coming months. »

The reaction was also immediate on the futures markets Federal fundsAccording to the calculations of the Chicago Mercantile Exchange, which now expects at only a 38.5% probability of seeing the Federal Reserve raise interest rates by 75 basis points in September, versus nearly 70% this morning. A turn of the screw is now expected by 50 basis points, with a probability of 61.5%.

Image credits: CME

again sanofi red lantern

The market seems reassured by the fact that we seem to have passed peak inflation and should continue to see dips in the second half.Judge Brian Price, of management firm Commonwealth Financial Network, in an interview with CNBC. The odds of a 75bp hike by the Fed seem to have diminished significantly after this report and we may see a 50bp hike only at the next meeting. If energy prices continue to fall, I expect the inflationary data to subside in the coming months. »

These US inflation numbers were, of course, the highlight of the session, bringing into the background corporate news, and on top of that it was very weak. The biggest increase in Cac 40, Alstom gained 6%. On the contrary Sanofi It loses more than 4%, still weighed down by a hiring halt to trials of tolebrutinib in some multiple sclerosis and by the deterioration of UBS analysts, who pitched the sale.

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