The Paris Stock Exchange, after its sharp rise in July (+9% almost, its first real monthly rise of the year), began August on a very hesitant note. On this first day of the month, the Bedroom 40 slipped a few points (-0.18% to 6,436.86 points), in a feeble trading volume of 2.8 billion euros. Renault, EssilorLuxottica and Engie, which published their half-year accounts on Friday, are among the best performers in the index. With a gain of 10% in two sessions, the automaker has almost erased all of its losses for the year.
The better-than-expected results of HSBC bank and the departure of a first shipment of Ukrainian cereals from the port of Odessa helped to limit the impact of the contraction in manufacturing activity in China and the euro zone, which fueling recession fears. On the other side of the Atlantic, manufacturing activity deteriorated although still growing. The index established by the Institute for Supply Management (ISM) among purchasing managers fell by 0.8 points, to 52.2, its lowest level since April 2020, while remaining above the threshold critical 50 points, which separates growth from contraction.
On Wall Street, the Dow Jones and the S&P 500 are stable.
78 allusions to inflation in 26 pages
The optimism that carried the stock market last week regarding a change in the monetary policy of the American central bank is considered excessive by several economists, to say the least, especially since Neel Kashkari, the president of the Minneapolis Fed, has reaffirmed on Sunday that the main objective of the Federal Reserve is to bring inflation back towards 2%, while his colleague from the Atlanta Fed, Raphael Bostic, declared shortly before that much remains to be done in terms of monetary tightening .
This weekend, Larry Summers, former Secretary of the Treasury of the United States under President Clinton, declared that the American central bank was seriously mistaken if it seriously believed that the key rate, raised to a range of 2.25-2 .5%, had reached neutrality (a level that neither slows down nor fuels growth) and that, therefore, it no longer needed to raise them significantly to fight inflation.
Bank BNY Mellon also recommends not to bet too much on a more “dovish” turn. [« colombe » ou accommodant] Fed on interest rates. “We believe that the press conference [de Jerome Powell] actually contained some elements ‘hawkish[faucon], including 78 different allusions to inflation in the 26-page transcript. It seems clear to us that the Fed is nowhere near concluding that inflation is back under control, and that further hikes will be needed, even at the cost of a mild recession and/or a weaker labor market »writes John Velis, strategist at BNY Mellon.
Another big program
The week will be driven by the monetary decisions of the Bank of Australia and the Bank of England, by the OPEC meeting, which should decide on the evolution of its production in September, as well as by the report on the July employment in the United States.
Company publications will also continue with around 170 S&P 500 companies, starting with Activision Blizzard, after the close of Wall Street tonight, Capterpillar, AMD, Starbucks and Uber, not to mention Europeans BP, Merck, BMW, Infineon, Bayer, Beiersdorf, Lufthansa and the Asians Alibaba and Nintendo. In France, five components of the Cac 40 will unveil their quarterly reports; Bouygues, Axa, Société Générale, Veolia Environnement and Crédit Agricole.