The Paris Bourse soared on Friday, buoyed by positive inflation signals. Investors are closely monitoring inflation indicators in Europe, which are fuelling hopes of a more accommodating monetary policy from the ECB. On the other hand, Wall Street’s positive close and prospects of interest rate cuts are fuelling market momentum, despite persistent uncertainties linked to oil prices and Fed policies.
The Paris Bourse rose sharply on Friday, buoyed by inflation indicators supporting the scenario of a first rate cut by the European Central Bank (ECB) in June.
At around 10 a.m., the leading CAC 40 index was up 1.05%, or 84.05 points, at 8,107.79 points. This optimistic trend follows a decline the previous day, when the index closed at 8,023.74 points. At 1 p.m., it stood at 8,092.67 points (+0.86%).
The session was marked by the publication of several inflation indicators in Europe, data that were closely watched by the market. In Germany, inflation fell to 2.2% year-on-year in March, its lowest level since May 2021, while in France, core inflation declined year-on-year to +2.2% in March 2024, after +2.6% in February.
This downward trend in inflation reinforces expectations of a more accommodating monetary policy from the ECB.
“The ECB has kept all its key rates unchanged but has revised its guidelines, clearly indicating that it is open to a rate cut in June” if inflation converges towards the 2% target, explains Mariano Cena, economist for the Europe region at Barclays.
Wall Street in the green
Wall Street’s positive closing and the ECB’s indications of a possible interest rate cut in June are fuelling market optimism. However, some economists warn of a possible divergence between the monetary policies of the ECB and the US Federal Reserve (Fed).
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