The Paris Stock Exchange eases its rebound at the start of the week when Wall Street is not

After two sessions that allowed it to recover 1.67%, the Cac 40 started to decline again this Wednesday. By 4:15 p.m., it lost 0.57% to 7,585.2 points on trading volume of 1.07 billion euros, with some investors absent for the “Juneteenth” public holiday in the United States, which commemorates the emancipation of slaves.

The announcement was expected as the European Commission opened the way for an excessive deficit procedure against France and six other EU states (including Italy) for exceeding the budget deficit ceiling of 3% of GDP set by European legislation last year. A situation that the country already experienced between 2009 and 2018, but which, with the formation of a new government and the National Assembly, takes on a completely new dimension within a few weeks. The costly programs of the National Assembly, which is favored to win parliamentary elections, and the left-wing alliance could prevent France from rectifying the situation while it is already in the crosshairs of rating agencies.

The BoE could bounce back at the end of the summer

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 in line with expectations. However, services inflation, closely watched by the BoE due to its dominance in the UK economy, came in higher than expected at 5.7%. 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 has certainly returned to 2% according to this morning’s numbers, but that is undoubtedly only temporary, judging by the sustained pace of changes in wages and core prices. This doesn’t necessarily rule out a surprise (from the BoE), but that would be quite unwelcome on the eve of the election deadline. ”, we say at RichesFlores Reseach.

Money markets now put the likelihood of an August easing at 30%, up from 45% before the data release. For State Street Global Markets, the September meeting seems like the right time. Investors also see the US central bank committed to easing over this horizon.

Paris rating animated by analysts

After a slight improvement seen in inflation, weak May retail sales figures again argue for the Fed to cut rates. But all central bankers speaking at various events yesterday reiterated that more evidence of slowing inflation was 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. »

On the value side, Dassault Systèmes fell 3% in response to Exane BNP Paribas’ move to “underperform,” previously “neutral.” Accor gained 1.8%, with analysts at Barclays upping their recommendation from “online weight” to “overweight” and Getlink up 1.7%, benefiting from UBS now being a buyer compared to “neutral” previously.

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