(BFM Bourse) – With an increase of 0.2%, the Paris Stock Exchange is regaining some air in a context of strong risk aversion. The session was notably marked by late morning statements from the Bank of England on purchases of long-term government bonds.
Who would’ve believed that. At the end of a new very volatile session, reflecting the nervousness of operators on the economic and geopolitical context, the Paris Stock Exchange finally closed up on Wednesday evening.
With an admittedly modest gain of 0.2%, the CAC 40 thus puts an end to an inglorious series of ten sessions of decline out of eleven. Highlight of the meeting: the Bank of England announced at the end of the morning to purchase long-term bonds from today until October 14th.
The rebound observed on Wall Street, the Dow Jones gaining almost 0.9% at the close of the European markets, came to support the financial markets of the Old Continent.
However, the trend remains very fragile, investors remain on their guard with the tightening of monetary policies, the deterioration of the economic outlook and a precarious geopolitical situation. Before the Bank of England’s statements, the CAC 40 lost 1.7% and was trading at February 2021 lows near 5,650 points.
An adverse situation in the background
The ten-year US borrowing rate also rose above 4%, back to levels not seen since 2008, before starting to fall again. The yield on the US flagship bond surged in a global context of global central bank rate hikes to curb inflation at its highest. Several US Federal Reserve officials have come out in favor of continuing to raise key rates. Including St. Louis Federal Reserve Chairman James Bullard known for his “hawkish” positions. He campaigns for appropriate responses to inflation that is still out of control, even if it means tipping the American economy into recession.
This threat of a recession is also weighing on market morale, as is rising tension on the geopolitical front, with the latest episode being suspicions of sabotage of the Nord Stream 1 and 2 gas pipelines in the Baltic Sea on Tuesday. The leaks affecting these gas pipelines therefore revive the specter of a serious energy crisis in Europe as winter approaches.
In the foreign exchange market, the Fed’s determination to pursue an aggressive monetary policy is still weighing on currencies. The euro is trading at 20-year lows against the greenback at $0.9664, weighed down by the strength of the dollar and also fears weighing on the economic health of the euro zone. The dollar also broke an absolute record against the British pound, which remains penalized by the stimulus measures announced by the country’s government. Even if it rebounds by 1% after the Bank of England’s announcements, the International Monetary Fund has also castigated this costly economic support plan, as has the rating agency Moody’s, which warned London against a slippage of its debt to an unsustainable level.
Trigano foot to floor
In terms of values, company publications are following their course, such as Trigano ending up more than 13% after the publication of its 2021-2022 annual turnover. The leisure vehicle specialist reports an improvement in rolling base deliveries which should materialize from the end of 2022.
Sanofi gained 1.6%, the pharmaceutical company anticipates a positive currency effect on its third quarter results, from 10% to 11% for turnover and from 12% to 13% for earnings per share.
On the other hand, STMicroelectronics limited its losses to 2.6%, penalized by information from Bloomberg according to which Apple would have abandoned its plan to increase its production of iPhone 14, the demand not being as much as expected for the Apple brand.
Nexity dropped more than 14% to 10-year lows as the group’s debt worries observers.
Sabrina Sadgui – ©2022 BFM Bourse