(BFM Bourse) – Almost at a standstill in mid-session, the CAC 40 accelerated its decline at the start of the afternoon in reaction to comments by Christine Lagarde who considered that price pressures remained high. An American statistic suggesting a potential entry into recession of the world’s largest economy has driven home the point.
After a robust weekend, the Paris Stock Exchange fell back into its bearish ways. Yielding 0.96% at the close, the CAC 40 ended this first session of the week at 7200.91 points, not far from its lowest at the lowest of the day (7193.37 points). The European markets, which until then had been fairly good, accelerated their loss sharply, shortly before the opening of Wall Street. A potential explanation for this stall can be linked to comments made by the President of the European Central Bank (ECB), Christine Lagarde.
According to comments reported by the Reuters agency, the central banker felt that she currently saw no “tangible proof” that underlying inflation (excluding energy and food prices) had reached “a peak”. Pricing pressures also remain “high”, she added, speaking at a hearing before MEPs.
“This speech is offensive, proactive, ‘hawkish’ (restrictive)”, considers Alexandre Baradez, market analyst at IG France. “Risk appetite in Europe may also be weighed down by the perception of a divergence in monetary policies, with a pause on rates not yet very close in Europe, unlike the United States”, adds the analyst.
The latter also points to a rating from Morgan Stanley which can also weigh on the trend. Quoted by Bloomberg, the strategists of the American bank believe that European stocks, measured by the MSCI Europe Local index, could fall by 10% by this summer, due in particular to an economic slowdown in the coming quarters and market liquidity, dried up by a wave of US sovereign debt issues.
Moreover, an American statistic highlights this potential recession scenario for the world’s largest economy. Services activity in the United States showed signs of weakness last month. The ISM index contracted to 50.3 in May from 51.9 in April, while the market hoped for an advance to 52.4 last month.
Transgene, star of the day
In terms of values, TotalEnergies gave in to the call for a drop (-0.60%) as did the oil services group CGG (-0.7%), despite the rise in oil prices. Only Vallourec resisted and closed slightly up 0.3%.
The prices of WTI and Brent from the North Sea, the two major benchmarks for black gold, rose another 1.3% following Saudi Arabia’s decision to cut its production by 1 million next month. barrels per day. However, this measure may not be enough to create a real upward current on the raw material, while many investors have adopted a bearish position, due to the degraded economic situation.
On the other side of the spectrum, luxury had a difficult session, probably suffering from profit taking. LVMH, Hermès and Kering shares all fell between 0.9% and 2%.
Excluding the CAC 40, Eramet escaped the downward pressure (+2.6%), the stock benefited from Stifel’s initiation of hedging on the purchase. The design office sees promising prospects for the deeply restructured mining and metallurgical group.
On the small cap side, Transgene jumped 22% after the publication of positive results for its HPV-related cancer vaccine.
On foreign exchange, the euro dropped 0.15% against the dollar at 1.0713 dollar.
Sabrina Sadgui – ©2023 BFM Bourse