(BFM Bourse) – The Paris Stock Exchange closed down as the latest published indicators suggest a deterioration in economic activity in the euro zone. In the United States, favorable statistics on employment dashed hopes of a more flexible Fed on its short-term rates.
The Paris Stock Exchange catches its breath the day after a powerful rebound. The CAC 40 closed down 0.90% back below 6000 points, at 5985.46 points after rebounding more than 4% at the close on Tuesday evening.
Euphoria gives way to caution. Inflation is not yet showing signs of easing and is further weakening the European economic machine. The decline in economic activity in the euro zone accelerated in September in the private sector, for the third consecutive month. According to the Flash PMI compiled by S&P Global, it fell to 48.2, its lowest level in 20 months, from 48.9 in August. As a reminder, an indicator below 50 marks a contraction in activity, while it is an expansion beyond.
“An economic recession is looming in the euro zone, as businesses in the region have reported a deterioration in the economy as well as rising inflationary pressures, linked to a surge in the cost of energy”, commented Chris Williamson, chief economist at S&P Global.
The future direction of energy prices is indeed worrying investors as the OPEC countries and their allies (OPEC+) have endorsed a drastic drop in their oil production target. US President Joe Biden also said he was “disappointed with OPEC+’s short-sighted decision.” Oil prices rebounded more than 2%, with a barrel of Brent trading at $93.67 and WTI at $88.17.
In the United States, the private sector created 208,000 jobs in September, according to the ADP survey. A statistic that further removes the possibility of a more lenient Fed on interest rate hikes. The official employment report expected this Friday for the month of September will act as justice of the peace.
Bond yields thus started to rise again, the American 10-year bond rose to 3.77% against 3.60% on Tuesday evening, while the German Bund of the same maturity fell back to 2% against 1.87% the day before.
Casino at its lowest
On the stock side, TotalEnergies gained more than 1% while TechnipEnergies gained 0.9%.
Automotive suppliers struggled, like Faurecia (-7.7%) or Valeo (-6.6%).
Casino fell more than 7% as Casino’s major creditors worried about its level of debt. They want strong acts to accelerate the restructuring of the group, as revealed BFM Business.
EDF adjusts to the price of 12 euros per share proposed by the State to withdraw the energy company from the rating.
On the foreign exchange market, the dollar is recovering, driven by its status as a safe haven. The euro thus lost more than 1.3% to 0.9866 dollars and the pound sterling lost 1.7% to 1.1275 dollars, after an intervention by Prime Minister Liz Truss, who was evasive on the major points of its budgetary measures.
Sabrina Sadgui – ©2022 BFM Bourse