Cac 40 Excludes Wall Street, Nvidia Crowned World’s Biggest Cap, UK Inflation Hits 2% Target

The Paris stock exchange fell slightly in early trading this Wednesday after recovering 1.67% over the previous two sessions. The operation also promises to be limited due to a lack of direction from Wall Street, closed on “Juneteenth”, which commemorates the emancipation of slaves in the United States. Around 10:35, the Cac 40 lost 0.4% to 7,599.8 points.

It didn’t take long for Nvidia to move from second to first in market capitalization in the world. Only two weeks. After climbing to the second step of the podium instead of Apple, it is now the leader Microsoft who has fallen. Up 3.5% on Tuesday in New York, the graphics chip maker’s market capitalization is $3.335 billion, outstripping Microsoft by about $20 billion. The iPhone maker is worth $3.290 billion.

Market capitalization of Nvidia (green), Microsoft (blue) and Apple (red) as of June 18, 2024. FactSet

Year-to-date, Nvidia has gained 174%, still under the influence of the deep transformation of the technology industry towards artificial intelligence, which has pushed the biggest companies to use Nvidia products as the backbone of their development in this matter. ” Investors are trying to ride the Nvidia bandwagon as long as they can said Ken Mahoney of Mahoney Asset Management.

Consumer laziness, but the Fed keeps its cool

The S&P 500 and Nasdaq Composite hit new all-time highs, also supported by hopes that the Federal Reserve will soon loosen its monetary policy. May’s weak retail sales data illustrated signs of weariness among the US consumer – a key driver of growth – which could encourage the Fed to cut interest rates. ” The data clearly reflects a shift in the behavior of consumers who are becoming more conservative, feeling the pressure of high interest rates and the depletion of savings. (accumulated during the pandemic, editor’s note), commented Rodrigo Catril, strategist at National Australia Bank. Importantly, we expect this trend to continue in the coming quarters. “.

All members of the central bank, who spoke at various events yesterday, reminded that more evidence of a slowdown in inflation is needed. At 3.3% for one year in May, it is still too far from the target. ” I will need to observe a period of favorable inflation, softening demand and expanding supply before I am convinced that a reduction in the target range for the federal funds rate is appropriate. said Alberto Musalem, the new head of the Saint-Louis Fed. These conditions can take months and more likely quarters to fulfill. »

UK inflation returns to 2%

In the UK, the annual consumer price index reached the 2% target set by the Bank of England in May for the first time since July 2021. A slowdown of three-tenths from April is in line with consensus. Services inflation, closely watched by the BoE due to its dominance in the UK economy, rose slightly to 5.7% from 5.9% in May, slightly more than expected. The central bank, which is expected to hold its key rate at 5.25% at its meeting tomorrow, has previously said that a return to target inflation is not enough on its own to start a new phase of its monetary cycle. ” Inflation may return to 2%, but may not stay there for long, said Zara Nokes, an analyst at JPMorgan Asset Management. Services inflation is still too high “.

On the value side, Dassault Systèmes shows the biggest drop in the Cac 40 (-3.3%), a mistake by BNP Paribas Exane, which has since moved to “underperform” from “neutral.” Accor gained 2.5%, Barclays analysts raised their recommendation from “online weight” to “overweight” and Getlink, up 2.3%, benefits from UBS being a buyer, compared to “neutral” previously.

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