With this bad data from the United States, the stock market is beginning to think that the Fed's action is finally bearing fruit

With this bad data from the United States, the stock market is beginning to think that the Fed’s action is finally bearing fruit

Catapult effect on the Paris Stock Exchange! The Cac 40, which was content to nibble on a few fractions until mid-afternoon, suddenly took off in reaction to a statistic on US real estate that, however, has left traders unmoved in recent months.

For the first time, home prices calculated by the S&P CoreLogic Case-Shiller index fell 1.3% in the top 20 cities surveyed month-on-month in August. Even if they are still higher, still much higher than a year ago. It’s their biggest drop since 2009… In detail, San Francisco, Seattle, and San Diego posted the biggest month-over-month drops, down 4.3%, 3.9%, and 2.8%, respectively. In one year, the rise in housing prices is thus reduced from 15.6% to 13.1%, the largest difference observed during these 35 years of statistical history, Diana Olick underlines for CNBC.

A lagged effect on inflation

For Bill Adams, an economist at Comerica, whose statements are also broadcast by the US channel, the correction in real estate prices will constitute a ” big brake on GDP in 2023, which is likely to slow down inflation. He expects real residential investment to fall 18% in 2023 from this year. ” Real estate prices feed into housing costs in inflation indices that the Fed targets with a lag of several quarters, so the drop in prices in mid-2022 will start to curb inflation in 2023 Bill Adams says.

That was all it took for investors to judge that the multiple tightening screws operated by the US Federal Reserve were starting to pay off, gradually taking the pressure off equity markets. If it seems certain that the Fed will raise its rate again federal funds at 75 basis points on November 2, San Francisco branch president Mary Daly estimated late last week that if high inflation did ” very difficult “a pause in monetary tightening”, it was time to start to discuss a slowdown. More precise, the Wall Street Journal reported for his part that the central bank could discuss, at its next meeting, a reduction in the magnitude of the increase in the cost of money in December.

At the close, the Cac 40 jumped 1.94%, to 6,250.55 points, in a traded volume of 3,300 million euros. In New York, the indices, including future were down before the statistics were released, they are clearly in the green. the dow jones take 0.8%, the S&P500 advance of 1.2% and the Nasdaq Composite 1.8%, a few hours after the presentation, by the two Gafam Microsoft and Alphabet, of their accounts for the third quarter. The 10-year bond yield fell 17 basis points to 4.06%.

Air Liquide star of the day

In Paris, quarterly billing announcements continued. In this exercise it is liquid air who came out better The share of the industrial gases group grows by more than 6%, well ahead of the Cac 40. The activity increases by 8.3% on a comparable basis, that is, excluding the scope of the exchange rate and, especially in the current context, energy prices, whose rebound has been particularly well managed.

Excluding the flagship index, Interparfums jumped 11.3%. The perfume designer has raised its economic goals for 2022, after a rebound in sales in the third quarter.

The other way, Remy Cointreau lost 4.6%. The premium spirits group expects sales and profit growth to slow as consumption returns to normal after two years. exceptional “.

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