(CercleFinance.com) – The consolidation phase continues in Paris where the CAC40 drops -0.9% towards 7.244 (against -1.3% this morning towards 7.213): this represents a cumulative decline of -3% over the 3 first sessions of August (note an increase in volumes of +20% to 1.5 billion euros against 1.2 billion euros the day before at the same time.
The Euro-Stoxx50, for its part, lost -1% towards 4.292, wiping out all its gains since July 11.
For many managers, equity markets have become overvalued after their strong rise since the start of the year, with some even citing growing ‘complacency’ on the part of investors.
Wall Street has just reopened down from -0.4 to -0.5%, once again showing resilience.
But the tension is still rising a notch on the US T-Bonds which show +9Pts at 4.187%, the highest since the beginning of November 2022.
The good US figures published at 2:30 p.m. may contribute to this tension: non-agricultural productivity increased by 3.7% in the United States in the second quarter of 2023 at an annualized rate, according to a preliminary estimate by the Department of Labor, an increase much stronger than that expected by economists.
This increase is based on both a 2.4% increase in production and a 1.3% reduction in the number of hours worked. Taking into account a 5.5% increase in hourly wages, non-agricultural unit wage costs increased by 1.6%.
The number of jobless claims in the United States increased by 6,000 during the week of July 24, standing at 227,000 according to the Department of Labor against 221,000 the previous week.
The four-week moving average, on the other hand, is down from 5,500 to 228,250.
Finally, the number of people regularly receiving benefits increased by 21,000 to stand at 1,700,000 during the week of July 17, the most recent period available for this statistic.
In the Eurozone, industrial producer prices fell by 0.4% sequentially and fell by -3.4% over 12 months then by 2.4% in the EU, compared to annual variations of – 1.6% in the euro zone and -0.5% in the EU observed in May.
Elsewhere, the HCOB composite PMI index of overall activity in the eurozone sank below the 50 mark unchanged, falling from 49.9 in June to 48.6 in July signaling the sharpest contraction in overall activity in the area since November 2022.
The weakness of the manufacturing sector weighed heavily on the overall economic performance of the region, while the growth of the activity of service providers slowed again, posting a level close to stagnation in July.
In France this time, France’s composite HCOB PMI index of overall activity fell from 47.2 in June to 46.6 in July, signaling an acceleration of the contraction in the private sector in July. .
This is also the largest drop in overall activity since November 2020.
The decline in activity resulted from a further deterioration in demand (particularly marked in the manufacturing sector), with the overall volume of new business registering its largest monthly decline in more than two and a half years.
Meanwhile, job growth slowed to its weakest pace of 2023 while business confidence improved from the 32-month low recorded in June.
On the interest rate markets side, there were no surprises and few reactions to the Bank of England’s decision to add 25pts to its manager (5.25% now).
The ‘Gilts’ take +5 Pts in yield to 4.492%… a difference comparable to those observed elsewhere in the Eurozone with +4.2 Pts on OATs at 3.122%, +5.1 Pts on Bunds at 2.558% and + 8pts on Italian BTPs at 4.272%.
Results season obliges, investors will also follow many quarterly companies, including those of Apple and Amazon expected this evening after the close of Wall Street.
The start of the day would prove to be busy in Europe with the publications of, among others, adidas, AB InBev, AXA, Infineon, Merck KGaA or Société Générale (whose profits pleasantly surprise, and few provisions for credit losses).
In the news of French companies, Groupe BPCE announced last night a 7% decline in its net banking income in the 1st half, to 11.3 billion euros, while net income group share amounted to 1.5 billion euros (-22%).
The insurance company AXA published this morning for its first half of 2022 an operating profit of 4.1 billion euros (1.79 euros per share), up 5%, putting it ‘on track for achieve its 2023 target of exceeding 7.5 billion euros’.
Veolia announces that over the first six months of the year, its current net income group share reached 662 million euros, up 18.7% at constant exchange rates, while its EBITDA stood at 3 .16 billion, up 8.2% at constant scope and exchange rates.
TotalEnergies, Baker Hughes, Technip Energies, Azimut (through the Azimut ELTIF – Infrastructure & Real Assets ESG fund) and other investors have signed a preliminary agreement to participate in a Zhero Europe fundraising.
Finally, Crédit Agricole and Stellantis announced on Thursday that they had finalized the joint acquisition of the activities of ALD and LeasePlan in six European countries.
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