Cac 40 and Wall Street under pressure from higher-than-expected US inflation, market news

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

Around 16:00, Bedroom 40 fell by 1.50% to 5,953.83 points on a business volume of 1.5 billion euros. in Frankfurt, Dax gives 1.58%. In New York Dow Jones lose 1.07% and NASDAQ Composite 1.10%.

A 7.5% m/m increase in energy prices accounted for half of the overall increase, with gasoline up 11.2% and natural gas by 8.2%. The good news is that the price drop at the pump over the past few weeks suggests that this move will be fully reversed this month.anticipates Michael Pierce, senior US economist at Capital Economics.

In general, the statistics confirm that the Fed will need to raise rates by 75 basis points at the meeting at the end of the month. While some will draw parallels to the very poor performance in May, the context is quite different: Commodity prices have fallen sharply and there are growing signs of a slowdown in economic growth, and these two effects will help reduce price pressures. Which should contain expectations that Fed officials will choose to raise rates by 100 basis points. “, he concludes.

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 grappled with the war in Ukraine and its impact on energy and other commodity prices, and inflation is already at record levels in the eurozone.

In the bond market, the yield on 10-year US bonds fell 7 basis points to 3.072%, while remaining below the yield on two-year bonds, which is 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 the coming recession. The International Monetary Fund also yesterday lowered its forecast for US GDP growth this year to 2.3% from 2.9% in June.

EDF suspended until further notice

EDO asked to suspend trading in its shares until further notice. The state has announced its intention to purchase the group’s shares it does not own in order to increase the capital to 100%. This is stated in the message of the Ministry of Finance. “The state is currently working to determine the conditions and will clarify its intentions no later than July 19, 2022 before entering the market. “.

Financial stocks are losing ground ahead of the publication of quarterly results of major US banks. BNP Paribas, Agricultural loan, Societe Generale as well as Aksa yield from 1.9% to 3.3%.

The automotive sector is also under pressure, with the related Stoxx 600 posting the second-biggest decline in the industry in Europe (-2.7%), trailing only tourism (-3.8%), while quarterly results Delta Airlines (-6.5% in New York), disappointed. Renault down 2.7%, stellantis by 2.4% and fauresia by 4.3%.

in Helsinki, Orion rose 8.3%, the biggest gain in the Stoxx 600. The Finnish pharmaceutical group raised its full-year guidance after signing a partnership agreement with Merck to develop a prostate cancer drug.