On the stock market, one source of questioning quickly chases another. After worrying about a possible default by the United States, finally ruled out at the end of last week thanks to the agreement reached in Congress on the debt ceiling, the market focused on Monday on the fall in the American ISM services index in May. At the close, the Bedroom 40 dropped 0.96%, to 7,200.91 points, in a transaction volume, however, little expanded to 2.55 billion euros.
Expected to rise to 52.2, the ISM services index fell, to the greatest surprise, from 51.9 in April to 50.3, very close to the 50 threshold, which separates the contraction phase from the business expansion area. Should we see this as a sign of a possible tipping into recession in the United States? For Andrew Hunter of Capital Economics, the answer is yes. This statistic is broadly consistent with the Fed’s regional surveys of activity and most other hard economic data which, due to falling exports, worsening slowdown in business investment and collapsing growth consumption, suggest that GDP growth will be barely above zero in the second quarter “, he analyzes. In China, the outlook is considered uncertain by economists despite the acceleration of activity in services last month.
This cocktail, added to the persistent tensions between Beijing and Washington, pushed the firm Oddo BHF to be more selective on luxury stocks. In a note published today, the analyst in charge of the sector estimates that ” we are now entering a period where luxury spending should begin to be more visibly impacted: spending levels have increased more than usual in recent years and the continued deterioration of the macro environment will eventually impact customer sentiment even the wealthiest. Therefore, he is cautious, more than the consensus, and considers that the recent correction is not necessarily a short-term buying opportunity. These remarks caused headlines like LVMH, Hermes And Kering in Paris. TotalEnergies also ended down 0.6%. The action has yet gained up to 1.6% in session, driven by oil prices.
OPEC+ cuts throughput
Meeting on Sunday, OPEC member countries and their allies, which supply around 40% of the world’s crude, decided to reduce their extraction quotas. From 2024, they will produce 1.4 million barrels less per day. A drop which is added to the announcement of Saudi Arabia which, playing alone, will cut its crude oil extractions by one million barrels per day in July. This reduction could continue beyond, has already warned the Saudi Minister of Energy, Prince Abdelaziz ben Salman, whose country will extend until 2024 its voluntary production reduction program of 500,000 barrels per year. day. On the stock market, the barrel of North Sea Brent has, in line with the desired objective, jumped almost 4% before reducing its lead to 1%. Despite the increase, it remains below the 80 dollar mark (at 77 dollars), considered by Ryad as the minimum threshold to ensure the balance of its budget. In 2022, the kingdom had estimated that $90 was a ” good price “.
Apple at the top
Beyond luxury and oil, values have received little attention, with the exception ofApple. The Apple brand hit a new all-time high at $184.36 a few hours before the presentation at its headquarters in Cupertino, California, of its mixed reality headset, a subject it has been watching since 2016. know the price or the characteristics, Wall Street seems excited.
On a more macroeconomic front, the market is already preparing for the next monetary policy decision by the US Federal Reserve (fed), whose committee will meet on June 13 and 14. For Michael Hewson of CMC Markets, he “ would be easier to raise rates in June and keep options open for July. Communication would undoubtedly be easier, however, the differences within the FOMC already show that different opinions are beginning to emerge for the future. “. If we judge by the tool developed by CME Group based on Fed funds futures contracts, the probability of a status quo – and therefore of maintaining rates between 5% and 5.25% – is 79.5%, against 20.5% for an increase of 25 basis points.