The Paris stock exchange was up on Friday morning, buoyed by corporate results that were well received by investors. Investors were also paying close attention to the release of US inflation data, which could lead to a reaction from the US central bank.
The Paris stock exchange was up 0.25% at the start of trading on Friday, buoyed by corporate results that were well received by investors.
The leading CAC 40 index rose by 20.39 points to 8,037.04 at around 09:30. By 3:30 pm, it had risen again to 8,054.95 points (+0.48%). Over the week, it was up 0.19%, with its session peak dating back to April 2, at 8,253.59 points.
The main stock markets closed lower on Thursday, following U.S. results and economic data indicating a sharper-than-expected slowdown in the U.S. economy and accelerating inflation in the first quarter.
For its part, the Bank of Japan kept its policy unchanged, maintaining its short-term interest rate between 0 and 0.1%. Although this decision had been anticipated, it nevertheless caused the yen to fall against the dollar, reaching its lowest level in 34 years.
Meanwhile, Moody’s and Fitch are due to deliver their spring verdicts on French sovereign debt this evening. This comes at a time when the recent announcement of a deterioration in public finances has raised fears of a downgrading of their ratings…
CAC40 company performances
Friday’s session was marked by the positive reception of quarterly results from major companies, both in Europe and the United States. This contrasts with the previous day, when several results were poorly received.
Companies passing their quarterly exams included Hermès and Dassault Systèmes in Paris, and Microsoft and Alphabet (parent company of Google) in the US.
TotalEnergies reported lower first-quarter results, mainly due to lower gas prices. Despite this, the company confirmed that it would maintain its share buybacks. Adjusted net income was $5.1 billion, down 22%, while adjusted EBITDA was $11.5 billion, down 19%. Oil production stood at 2.461 million barrels per day, down 2% on the first three months of the year.
In the wake of these results, the company’s CEO also spoke for the first time of a primary listing of the company on the New York Stock Exchange, while the head office would remain in France. This would be a “legitimate question”, he said, referring to the growing shareholding of North American shareholders. Paris is currently the main listing for the group, which is also present on the New York Stock Exchange.
Airbus reported a sharp fall in operating profit for the first quarter, in contrast to Safran, the aerospace equipment supplier, which reported impressive organic sales growth of 19.1% for the quarter.
Accor, the hotel group, reported first-quarter sales growth of 8%, underpinned by strong momentum in the Asia-Pacific and Middle East markets.
Finally, Rémy Cointreau saw its sales for the 2023-2024 financial year decline by 19.2% on an organic basis, which was in line with its forecasts. In the fourth quarter, the decline in billings was limited to 0.7%, following a significant 22.7% drop in the previous quarter.
Rising inflation in the US
This Friday, investors awaited with interest the US inflation report, in particular the Personal Consumption Expenditure (PCE) price index, announced later in the day. The PCE is a crucial indicator for the US Federal Reserve (Fed) in its monetary policy decisions.
The PCE price index rose by 0.3% in March compared with the previous month, and by 2.7% on an annual basis. Excluding food and energy, this inflation measure, which is also closely watched by the Federal Reserve, recorded an increase of +0.3% on a monthly basis and +2.8% on an annual basis. Although slightly higher than consensus expectations for the annual change, these figures are in line with expectations for the February-March period.
This news was welcomed by the market, which had been fearing even higher figures following the announcement of a sharper-than-expected acceleration in core inflation during the first quarter (+3.7% vs. +3.4% anticipated). In detail, household spending stagnated at 0.8% (vs. +0.6% expected), while incomes rose by 0.5% as forecast.
“This inflation report isn’t as hot as feared, but investors shouldn’t get too entrenched in the idea that inflation has been completely cured and that the Fed will cut interest rates in the short term,” points out George Mateyo at Key Wealth. “The prospects for monetary easing remain, but they are not assured, and the Fed will probably need weakness in the labor market before it has the confidence to proceed with a rate cut.”
Future Fed rate hikes
This report could influence the Fed’s outlook on interest rates, which meets next Tuesday and Wednesday.
Some analysts believe that the Fed could consider two rate cuts by the end of the year, but not before September.
However, further surprises regarding inflation or the labor market could call these forecasts into question.
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Featured photo : © Hermès
