(BFM Bourse) – The flagship Parisian index closes below this threshold for the first time since last March, due to increasing tensions on the bond market. The CAC 40 lost 1% at the close Tuesday evening.
After trying to defend 7,000 points to the end, the Paris Stock Exchange did not maintain this symbolic milestone as the pressure from the bond market was too strong. The CAC 40 closed this tough day with a sharp drop of 1.01%, returning to 6,997.05 points, after having registered its lowest since the end of March at 6,989.77 points.
The flagship Parisian index had made a brief incursion below this flagship threshold of 7,000 points around 3:00 p.m. before recovering but still not far from the red zone. Markets were already weakened by the rise in bond yields to 2007 highs for the American 10-year.
A sudden rise in rates
But the robust job creations revealed by the Jolts report sounded the death knell. Job openings were higher than expected at 9.61 million in August, shattering the consensus which expected 8.815 million job creations after 8.92 million in July. Once again, the markets interpret this good news for the American economy as bad news for the financial sphere, as it gives credibility to the probability that the American Federal Reserve (Fed) will once again raise its key rates by the end of the year.
And on the sovereign debt market, the yield on the 10-year American bond is now close to 4.8%, at 4.777% after today’s statistics. The yield on the 30-year American bond is approaching 5% at 4.908% compared to 4.796% Monday evening. This sudden increase also worries JP Morgan strategists.
“If rates continue to rise as they are, there will be a financial accident. Something will break and the Fed will act in the other direction (towards a rate cut, editor’s note),” declared Monday evening on Bloomberg TV David Lebovitz, global market strategist at JP Morgan Asset Management.
The day before, the September ISM manufacturing index in the United States was better than expected, reinforcing the idea that the American economy is resilient. And several members of the Fed confirmed, during their latest interventions, the idea that high rates were set to last for a long time.
In this context, futures increased the probability of a hike at the next November meeting from 27% on Monday to 34.9% on Tuesday, according to the CME FedWatch tool.
>> Access our exclusive graphic analyses, and gain insight into the Trading Portfolio
Sanofi is making progress
On the CAC 40, only two survivors escaped the gloom of the Parisian market, namely Pernod Ricard (+1.2%) and Danone (+0.6%).
Tech and real estate fell with rate increases, Unibail-Rodamco-Westfield lost 4.05%, Worldline lost 3.8% and Capgemini 2.3%.
The hit of the day is signed by Vantiva which ends up sharply by 21.9%. The former Technicolor announced the acquisition of part of the activity of the American CommScope, a specialist in connected homes, in exchange for a 25% stake.
On other markets, the euro fell by 0.2% against the dollar, to 1.0456 dollars. Oil contracts are increasing. That of December on Brent from the North Sea gained 0.4% to 91.11 dollars per barrel, while that of November on WTI listed in New York increased 1% to 89.73 dollars per barrel.
Sabrina Sadgui – ©2023 BFM Bourse