CAC 40: still digesting US inflation figures

(CercleFinance.com) - The Paris Bourse is heading for a green opening on Thursday morning, as the market digests the good inflation figures published over the past two days in the United States.


At around 8:15 a.m., the future contract on the CAC 40 index was up 10.5 points at 8253.5, suggesting that the start of the session could be close to the 8250 technical barrier.

Buoyed by the reassuring trend in US inflation, the Paris market ended yesterday's session with a gain of 0.2% at 8239 points, a timid rise which nevertheless enabled it to set a new closing record.

On Wall Street, the major New York indices also hit new all-time highs yesterday, testifying to a confirmed return of risk appetite.

Despite this positive momentum on the markets, investors are still questioning the interpretation to be made of better-than-expected inflation figures in the USA.

Rebounding to 3.6% in April, the CPI 'core' consumer price index - which measures inflation excluding food and energy - slowed to its lowest level in two years.

'While markets seemed relieved that the closely-watched inflation data did not show, as in March, a larger-than-expected increase, we still see the data as worrying', moderates Tiffany Wilding, economist at Pimco.

The US will indeed need a more substantial deceleration in consumer goods prices before the Federal Reserve will consider easing monetary policy", she adds.

For Deutsche Bank, the most important thing is that inflation "is heading in the right direction after the higher figures published for the first three months of the year".

Thursday will be punctuated by the publication of new US indicators, including the latest housing figures, import prices and jobless claims.

Investors are hoping that these statistics will confirm the scenario of a first rate cut in September, now envisaged by over 53% of traders according to the CME Group's FedWatch barometer.

In the meantime, attention will be focused on the latest earnings releases, including those of Cisco, which yesterday reported a better-than-expected performance and delivered a positive message on its business.

At midday, US retail giant Walmart will unveil its quarterly accounts, which analysts expect to have benefited from a favorable sales momentum.

This morning, German industrial group Siemens reported a slightly lower-than-expected quarterly profit, but confirmed its full-year targets.

On the sovereign debt front, the yield on 10-year Treasuries eased sharply to around 4.35%, its lowest level in just over a month.

The German 10-year, the benchmark for the eurozone, fell to 2.42% on the increasingly serious prospect of a rate cut by the ECB as early as next month.

Oil prices continue to rally in the wake of last week's announcement of a slight weekly decline in US crude oil inventories.

US light crude (West Texas Intermediate, WTI) is up 0.5% at $79 a barrel, while Brent is up 0.4% at over $83.

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