The Paris Bourse sank by more than 1.5% (the CAC40 dropped to 7,926pts) before cutting its losses to around -1.2% to -1.3%, in the wake of luxury stocks with -2% for LVMH and Kering on average and -1.5% for Hermes.
Losses widened sharply at 2:00 p.m. with the publication of the first German inflation figures for May: HICP inflation came out at +2.8% year-on-year, compared with +2.4% in April (consensus +2.6% to +2.7%).
The relative resilience of US indices since 3:30 pm (-0.6% to -0.8%) has helped limit the damage (the E-Stoxx50 is down -1.3%), but interest-rate tensions are likely to weigh on the market between now and 5:30 pm, with Bunds and OATs up 7.5pts to 2.665% and 3.152% respectively.

The German CPI is suffering from an unfavorable basis for comparison, as prices had fallen in the same period last year due to a voluntary reduction in public transport fares.

Analysts at Bank of America said they were expecting the CPI (core consumer price index) to rise by 2.3% year-on-year, after 2.2% in April, rather than 2.6%.

By the end of the week, market participants will have further indications of price trends in Europe, with Spanish figures due tomorrow, followed by French and eurozone data on Friday.

All these figures will be decisive in confirming the hypothesis of a rate cut by the European Central Bank (ECB) as early as next week.

The markets will also be on the lookout on Friday for PCE inflation data in the USA, the Federal Reserve's favorite indicator of price dynamics, expected to decline slightly.

While awaiting the release of this crucial inflation data, European markets could benefit from the rise of technology stocks in the wake of the heavyweight that is now Nvidia.

Thanks to the continued spectacular rise of the manufacturer of AI-dedicated processors (still +7% last night), the Nasdaq set new all-time highs on Tuesday.

By adding $195 billion in additional capitalization yesterday, the equivalent of TotalEnergies, Nvidia (virtually stable at around $1,130) - now valued at some $2,850 billion - is close on the heels of Apple and its $2,935 billion capitalization... and exceeds the CAC40's 'capi' (E2,840 billion).

This movement confirms that the fear of persistent inflation and high interest rates for a prolonged period remains more than offset for the time being by the hopes surrounding AI.

In this context, the surge in bond yields goes relatively unnoticed, although the yield on ten-year US Treasuries is up +6Pts, above 4.600%.

In other French company news, Exail Technologies announces that it has signed an initial partnership with Safran for WIZY-WAP, its latest-generation on-board communications equipment, a partnership which should eventually generate annual sales of several million euros.

Safran also announces that its innovations have been recognized by a Crystal Cabin Award in the 'Cabin systems' category for the 'CUBE' developed by Safran Cabin.

Bouygues Telecom states that it has been informed by SFR and La Poste of differences between them concerning its planned acquisition of the virtual operator La Poste Telecom, currently jointly owned by La Poste and SFR.

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