Stock market: Inflation under control, Wall Street is racing, the CAC 40 misses the boat

Wall Street's flagship indices, the S&P 500 and the Nasdaq Composite, reached new heights this Wednesday, galvanized by a reassuring report on American inflation. The Cac 40, for its part, failed to join in the ambient euphoria, narrowly failing to equal its record.

American inflation reassures Wall Street

April data on inflation in the United States pleasantly surprised investors. Consumer prices rose just 0.3%, a tenth of a point less than expected, and 3.4% year-on-year, in line with expectations. Excluding food and energy, the price increase stood at 3.6% on an annual basis, its lowest level since April 2021.

This lull on the inflation front was welcomed by the American markets. The S&P 500 and Nasdaq Composite soared to new highs, gaining between 0.4% and 0.6%. Bond yields have meanwhile fallen, a sign of renewed optimism.

However, experts remind that it will take more than a month of improvement to convince the Federal Reserve to ease its monetary policy. The re-acceleration of inflation in non-housing services remains worrying and could prompt the Fed to maintain high rates until September.

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Mixed signals on consumption

In addition to inflation, retail sales in April disappointed, stagnating while analysts were expecting an increase of 0.4%. Excluding automobiles, fuels, construction materials and catering, they even fell by 0.3%.

However, economists put this slack into perspective, attributing it to a compensation effect after several months of high consumption. They maintain their forecast for solid growth in household spending in the second quarter, despite pressure from high interest rates.

Rebound in Europe, the CAC 40 lagging behind

In Europe, the European Commission has revised its inflation projections downward for 2024, now expecting 2.5% compared to 2.7% previously. GDP growth is confirmed at 0.8% this year and 1.4% next year.

On the value front, CGG soared 20% after solid quarterly results, while Trigano fell 9% despite rising profits, penalized by disappointing cash generation.

Despite Wall Street's euphoria, the CAC 40 failed to beat its own record this Wednesday. While the slowdown in American inflation bodes well, caution remains necessary in the face of the contradictory signals sent by the economy. Investors will keep a close eye on the next indicators to gauge the trajectory of the markets in the months to come.

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