(News Bulletin 247) – The Paris Stock Exchange continues its rebound. The CAC 40 rose by 0.7%, further appreciating the inflation figures in the United States published the day before, which suggest a first rate cut by the Fed in September.

The Paris Stock Exchange is staying on course, still in good shape after inflation figures in the United States which gave complete satisfaction to investors.

The CAC 40 rose 0.7% to 7,667.29 points after having already welcomed, the day before, a clear easing of prices in the United States last month. On a weekly basis, the leading index has now made up (+0.07%) the losses accumulated at the beginning of the week.

A confident market

Consumer prices showed signs of easing in June, according to the latest data from the Commerce Department. Inflation slowed more than expected in June, to 3% year-on-year, compared with the consensus forecast of 3.1% and down from 3.3% in May. More importantly, the housing price index rose just 0.2%, its slowest gain in three years.

“The specific components of inflation that are showing signs of decline are precisely those that the Fed and markets have been focusing on. Notably, services inflation continues to moderate, with housing inflation increasing by only 17 basis points month-on-month, compared to 40 basis points in the previous month: this is the inflation most feared by the Fed and it is finally showing signs of moderation,” reacted Florian Ielpo, head of macroeconomic research at Lombard Odier Investment Managers.

“The ‘housing’ component is reassuring for the continuation of the disinflation path. This, coupled with more worrying signals on the labor market, should push the Fed to specify its schedule for reductions in key rates,” declared Bastien Drut, head of strategy and economic studies.

The markets therefore firmly believe that the Fed will initiate its downward movement on its key rates as soon as the school year begins. The probability of a quarter-point (0.25 percentage point) cut in federal rates in September has jumped to 86.4% according to the CME Group’s Fedwatch tool, compared to 72.2% last week.

To stay on the subject of prices, investors will learn about producer prices at 2:30 p.m. This publication will be followed at 4 p.m. by the American household confidence index measured by the University of Michigan.

This flood of statistics should not obscure the opening of the results season in the United States, with the major American banks JPMorgan, Citigroup and Wells Fargo reporting before the opening of Wall Street.

Kaufman & Broad solid

In France, it is mainly the small and mid-caps that announce their results, before the heavyweights of the CAC 40 next week.

Kaufman & Broad climbed 4.8% after reporting half-year results that TP ICAP Midcap described as “solid.”

Ekiniops fell 9.2% after announcing a 19% drop in its turnover for the first half of the year.

Kerlink fell by 21.2%, the Internet of Things specialist is no longer able to confirm its objectives revealed last March, citing the wait-and-see attitude of the market and “reduced” visibility on the evolution of its activity.

On the foreign exchange market, the euro gained 0.1% to $1.0887. Oil remained well-oriented, supported by the weakness of the dollar after the American inflation data. The September contract on North Sea Brent gained 0.7% to $86.03 per barrel while the August contract on WTI listed in New York jumped 1% to $83.44 per barrel.