(BFM Bourse) – Returning to 6,300 points on Monday, the tricolor CAC 40 index fell by more than 1% on Tuesday while futures contracts on the main American indices signaled a decline on Wall Street in the afternoon, bringing the S&P 500 closer to the symbolic threshold of -20%, marking what is usually called the entry into the “bear market”.
Stabilized on Friday and rebounding 1.17% on Monday, the CAC 40 fell again on Wednesday, losing 1.42% as the midday approached to 6,268.74 points.
“The valuations of financial assets have adjusted sharply since the start of the year, returning below their pre-Covid level, so that they appear reasonable. equities for long-term investors”, observes Xavier Chapard of the research & strategy team at La Banque Postale Asset Management. “But valuations are not good indicators for the performance of short-term assets,” said the strategist, continuing to advocate a cautious or defensive approach to equities for the moment.
Across the Atlantic, the “futures” indicate a possible decline of more than 1% for the main indices after very disappointing results from Snap, parent company of Snapchat, bringing the S&P 500 closer to the bar (entirely symbolic) of -20% of retreat from the previous peak.
In Europe, the decline in the PMI Composite for the eurozone in May to 54.9 does not encourage optimism, S&P Global Market Intelligence (formerly IHS Markit) stressing that the weakness of the manufacturing sector is worrying, the difficulties of manufacturers already seeming to spread to part of the service sector. It will be recalled that above 50, this indicator records an expansion of activity (and below 50 a contraction).
The euro continues to rise
The news is sparse for Parisian values, apart from aeronautics but not in a good way. Safran lost 2.4% as Reuters reported production delays of six to eight weeks at CFM International, its joint venture with GE in aircraft engines, while the announcement of the terms of the increase in capital of Air France-KLM led to a 7.3% decline in the share price.
Among the rare good news, the smartphone recycling specialist Largo climbed 1.5% on the announcement of a contract with Conforama.
Oil prices are changing little this Wednesday at 113.01 dollars per barrel of Brent, down 0.36%, and 109.91 dollars for WTI (-0.33%), the approach of the “driving season” (holiday season when people drive more) across the Atlantic being largely offset by the scale of demand destruction from China, as the world’s top crude importer still grapples with an epidemic rebound.
On the forex, or currency market, the euro accelerated to 1.0720 dollars (+0.26%), a peak of almost a month, driven by comments from Christine Lagarde suggesting that the euro zone will come out of the negative rates by September.
Guillaume Bayre – ©2022 BFM Bourse