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Cac 40: Galloping inflation in the United States and impending results put pressure on the markets

(BFM Bourse) – Equity markets, such as the Paris stock exchange, are preparing for the impact of the release of the United States consumer price index, which was heralded as “extremely high” by the White House in March.

Investors are once again concerned about the pitfall approach that they have long been unwilling to see, or at least largely put into perspective until recently, when the indices were already blatantly obvious. Remember that the CAC 40 were on the cusp of an all-time high at the start of the year, when inflation across the Atlantic reached levels not seen in decades and only the sounds of boots in Russia announcing the invasion really caused a correction from the end of January). But the risk now appears imminent, as companies will begin to provide concrete indications about their performance in early 2022 and, for some of them, specify their outlook by integrating the effect of cost increases into their targets.

It’s a safe bet we’ll talk about price power to try and select those who can absorb the shock of passing the mistigri to their customers. While the White House has hinted that inflation will be worse than expected in March, and quarterly releases in Paris tonight kick off with: LVMHthe tricolor flagship index yielded 0.86% 6,499.63 points around noon.

In February, the US Statistical Institute already flashed the consumer price index to 7.9% over a year, the highest inflation recorded since January 1982 (when you listened to Human League’s Don’t You Want Me on your transistor or maybe Get Down On It from Kool and the gang). But it’s clear we can expect worse for March, as the White House spokeswoman has called an “extremely high” level since the latest oil and gas-related increases will be integrated into the panel this time around. The bets are open to know if (when?) the 10% mark will be touched… Verdict this Tuesday.

Interest rate rise

The inflationary factor has two important consequences. On the one hand, this translates into a steady rise in bond yields (the 10-year Treasury yield is the highest since December 2018, and its German equivalent the Bund the highest since July 2015), making risk-free assets more competitive, especially against very expensive growth stocks. On the other hand, this will certainly be a point of attention in the discourse of companies, who will have to convince on the one hand that they can pass on the increase in their costs in their prices and on the other that this does not discourage consumers. Luxury is known for having this wealth to an incomparable degree: investors are clearly not too concerned about it LVMH and Hermès who outperformed (-0.1% and +0.2%) but barrier currently less convincing (-1.7%).

On the health side, bioMérieux has already reported on its commercial performance in the first quarter, revealing as expected a decline in activity related to ongoing Covid “endemization” (synonymous with a delay in the demand for tests). The title lost 5.8%.

Among the producers of raw materials, the metal heads in particular stand out Eramet (+3.8%) and ArcelorMittal (+1.4%), as well as oil service providers Maurel & Prom (+4.2%) and CGG (+3.7%) while the giant TotalEnergies continues to fall 0.9%. At the same time, the course of Brent climbed 3.07% to $101.50.

One of the rare emergences of the moment is biotech smallpox (+5.6%) following a US regulatory move for a treatment project for rare diseases, while the company hopes to secure the necessary new funding soon.

On the foreign exchange market theeuros fell 0.13% to $1.0872.

Guillaume Bayre – ©2022 BFM Bourse

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