The Paris Stock Exchange remained anchored in the red throughout this session on Friday, failing, at the same time, to align a seventh week of progression in a row. It absolutely had to end up, even stable. The Cac 40 lost 0.94%, to 6,495.83 points, in a trading volume of 2.8 billion euros. Over the week, the index lost 0.89%, but it has still gained almost 10% since the end of June. In New York too, the time has come to retreat. the Dow Jones gives up 0.88%, the S&P 500 loose 1.34% and the Nasdaq Composite 2,09%.
Operators are plagued by inflation that does not want to dry up in Europe, where the rise in producer prices, for example, far exceeded expectations in July in Germany. They flew away 37.2% over one year, well beyond the 32% expected by the consensus, and 5.3% over one month. This is the largest increase observed by the Federal Statistical Office since studies began in 1949. On the wholesale market in the country, the price of electricity is at a new peak of more than 550 euros on megawatt hour maturing in 1 year.
No inflation peak before 2023?
The outlook for inflation in the zone euro have not improved since the rate hike in Julysaid yesterday morning, Isabel Schnabel, member of the Executive Board of the European Central Bank. Enough to fuel the suspense about an increase of 25 or 50 basis points in the refi at the next meeting in September, a new turn of the screw, after that of 0.5 point in July, seeming acquired. ” I would not rule out that in the short term inflation will continue to rise. These inflationary pressures are likely to be present for some time, they will not disappear quickly “Admitted Isabel Schnabel. BlueBay Asset Management expects inflation to push up to 15% in the UK, with a peak which, globally in Europe, will not be reached before the beginning of next year.
A more aggressive attitude BCE which would be bad timing, as the growing risks of seeing the euro zone slip into recession loom. ” Shortages of materials and labor are weighing on the construction sector and, while these headwinds may ease over the remainder of the year, tighter monetary policy is expected to accentuate the decline in activity, estimates the firm Capital Economics. The latest surveys confirm that the sector is expected to reduce Eurozone GDP by around 0.25% in the third quarter, and the worst could be yet to come. »
US real estate in near recession
« German economic activity was flat in the second quarter as the bulk of eurozone countries grew quite rapidly with the boost of post-pandemic reopening. We believe German GDP will inevitably contract over the next three quarters as headwinds from rising energy prices and interest rates intensify “, wrote the same research office a little earlier in the week. Germany accounts for over 30% of eurozone GDP.
Same observation at UNITED STATES moreover, where real estate is already in a situation of near-recession. Sales of existing homes, published yesterday afternoon, have again fell 6% from June to July, a drop of 20% in one year. Real estate resales are at their lowest since May 2020.
Prospects for inflation which have particularly weighed on property companies in Paris. Covivio, Icade, Klépierre, Unibail-Rodamco-Westfield et Gecina all fell on Friday.
Banks and large industrials were also among the biggest decliners in the session. ArcelorMittal lost 4.9%, Renault et Stellar around 3%, Airbus 2,2%, BNP Paribas et Societe Generale almost 3%, in view of the growing difficulties in granting loans and the risk of business failure in a period of recession. In contrast, TotalEnergies once again outperformed the trend (-0.2%), driven by the theme of energy prices.
Jerome Powell more incisive in Jackson Hole?
The next major event is undoubtedly the holding of the symposium of Jackson Hole, annual American meeting of the most influential fundraisers on the planet. It will be August 26, the date has been confirmed by the US Federal Reserve.
There too, suspense, some believing that this could be the occasion for the president of the central bank, Jerome Powell, to raise his voice, even if the publications of the inflation and employment figures for the month of August will undoubtedly constitute the most decisive elements of the decision of the institution’s monetary policy committee during its September session.