The Paris Stock Exchange rebounds following eurozone inflation slowdown, as investors watch central bank response and US debt ceiling

2023-06-01 16:46:10

The star CAC 40 index gained 38.73 points, to 7,137.43 points, following having marked a sharp decline of 1.54% the day before.

The Paris Stock Exchange is starting June on a high note, following ending May with a monthly loss of 5.24%, its first monthly decline since the start of the year, but also the worst since September 2022.

Investors were reassured by the marked slowdown in inflation in the euro zone in May, to 6.1% over one year, following 7% in April, and by underlying inflation (which excludes energy and food) which fell to 5.3%, “its lowest level in four months”, according to Jack Allen-Reynolds, economist at Capital Economics.

And for Mabrouk Chetouane, head of market strategy at Natixis IM Solutions, the markets “wonder regarding the persistence of this inflation” and the response of central banks.

“We will continue to move forward – with determination and without discouragement – ​​until we see inflation return to our medium-term target of 2% in a timely manner,” the President of the European Central Bank (ECB) said on Thursday. ), Christine Lagarde.

The former minister also indicated that the institution’s key interest rates were approaching “cruising altitude”.

Also, two rate hikes “more and each 25 basis points (in June and July)” should occur “before keeping them unchanged”, according to Salomon Fiedler, analyst at Berenberg.

Investors were also reassured on Thursday by the adoption in the United States by elected members of the House of Representatives of the text aimed at raising the American debt ceiling, and thus avoiding a default.

The text must now be adopted by the Senate, which should decide quickly.

The bond market eased on Thursday. The interest rate on French ten-year debt was worth 2.81% once morest 2.85% at the close on Wednesday.

Descent into Hell for Casino

Casino shares fell 9.43% to 5.05 euros, hitting a new historic low following the group’s CEO, Jean-Charles Naouri, was taken into custody.

This police custody is part of an investigation targeting Casino for price manipulation and insider trading, at a time when the group must renegotiate its debt with its creditors in order to ensure its future. Since the start of the year, Casino shares have fallen by 48.31%.

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