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The Paris Stock Exchange is falling against US inflation

The Paris Stock Exchange fell 0.73% on Wednesday after a session in which highly anticipated US inflation figures shook markets.

The leading CAC 40 index lost 43.96 points, 6000.24 points, putting the balance of the week on the wrong side of the scale.

The bigger-than-expected jump in inflation has set the drums of a recession to which markets are more attentive than ever, notes Michael Hewson, an analyst at AJ Bell.

The US Consumer Price Index (CPI) in June rose to 9.1% on an annual basis, above expectations of 8.8%. Over the course of a month, the price hike was 1.3% in June versus 1.0% in May.

These numbers portend another rise in inflation and the continuation of the aggressive policy of raising interest rates by the US Federal Reserve (Fed), a sudden monetary tightening that risks further hurting growth.

In Europe, the first estimates of inflation in June were confirmed in France (5.8%) and Germany (7.6%).

Markets are more concerned as it appears that the European Central Bank (ECB) remains reluctant to raise interest rates to combat price hikes.

The euro, already affected by the bleak outlook for the European economy, with the possible interruption of Russian gas supplies, temporarily fell below the symbolic threshold of one dollar after the announcement of the US benchmark. This threshold has not been exceeded since the single currency came into circulation in December 2002.

Around 5:00 PM GMT, it rose 0.45% to $1.0083.

For Gilles Guibot, head of European equities at Axa IM, the new relationship between the euro and the dollar could be interesting for dollar investors who might be tempted by European companies, particularly exciting Middle Eastern investors.

According to Mr. Guibout, a clarification of market expectations in Europe can only be achieved with a better view, both in terms of the European Central Bank’s possible decision to control inflation and ease tensions with Russia linked to the war in Ukraine.

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Currently, the Russian gas giant Gazprom is acting by threatening to cut off gas supplies to Europe by claiming that it cannot guarantee the proper operation of the Nord Stream 1 gas pipeline, the only channel connecting Russia and Germany. Who ran maintenance for ten days.

Banks and cars down the cursor

In a context where recession fears are regaining the upper hand, banking and auto stocks in particular have been hit hard.

On the banking front, BNP Paribas lost 2.48% to €42.73, Societe Generale 2.22% to €19.90, and Credit Agricole 1.87% to €8.40.

In the auto sector, Stellantis finished -2.20% at €12.01 and Renault -2.13% at €23.23.

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