CAC40: a session for nothing, the semester ends at the lowest

( – The initial rebound in European markets fizzled out after a member of the FED confirmed that the scenario of a +75pt rise at the end of July was the most likely.
Wall Street – slightly positive in the first exchanges – fell back into the red (-0.4% for the Dow Jones, -0.2% on the S&P500), which weighed down the CAC40 which returned to equilibrium.
The Euro-Stoxx50 and the Dax40 maintain a lead of +0.4%, London is almost stable.

Volumes remain unusually low (less than 3 billion euros traded 1 hour from closing) in this technical session of the ‘4 witches’ which closes the second quarter and especially the first half of the stock market, which is the worst for 70 years.

The Paris Stock Exchange shows a loss of -5% over the week, -8% in 1 month (June deadline), then -17.2% since January 1st.
A single figure on the menu on June 17: the index of American leading indicators of the ‘Conf’Board’ fell again in May, notably under the influence of the fall in the stock markets.
This barometer, calculated by the Conference Board employers’ organization, thus fell by 0.4% last month after having already fallen by 0.4% in April (in accordance with economists’ forecasts).

Beyond the correction on Wall Street, the indicator was penalized by the slowdown in the residential construction sector and the deterioration in consumer prospects, explains Ataman Ozyildirim, head of economic research at the Conference Board.

“The index is still trading at levels close to its all-time highs, but it suggests that an economic slowdown is likely in the short term, knowing that the tightening of monetary policy is expected to further curb growth”, adds- he.

As a reminder, soaring inflation in the United States prompted the Federal Reserve on Wednesday to raise its main interest rates by 75 basis points, a first since 1994.

The ECB, for its part, was forced to organize an emergency meeting to try to reassure the markets about the risk of fragmentation of the yield on sovereign debt within the Eurozone: it did not really convince and the markets are reduced to conjectures, for lack of concrete elements concerning the tools to be put in place.

The ECB seems more than ever behind its counterparts after the 50 point rise in the Swiss National Bank (SNB) key rate, with other increases to follow.

Faced with the proliferation of monetary tightening measures (60 central banks have raised their rates since January 1), which threaten to plunge the planet into recession, investors are no longer able to regain a taste for risk.

Market participants are beginning to realize that the acceleration of the monetary tightening cycle is likely to have an impact on growth, first in the United States and then in the rest of the world.

While no asset class has been spared by the recent correction in the financial markets, the main warning signals undeniably come from the bond market.

The noticeable easing that is taking place this Friday on the Treasuries market should however offer a semblance of calm to equities, even if concerns are far from being completely appeased.

Yields on US Treasuries are all falling again, with the ten-year returning to around 3.215% (against 3.305% Thursday evening) after hitting 3.45% yesterday.

The two-year and the five-year are also falling back from their peaks the day before, confirming that it is now time to relax on the bond compartment.

In Europe, our OATs eased by -0.4Pts towards 2.263%, the Bunds fell by 1.6805% towards 1.73… which made it possible to reduce the spread with Italian BTPs which eased by – 11pts at 3.74%.

The macroeconomic agenda was also mine in Europe today, with the publication of the final inflation figures in the euro zone, then the industrial production and the production figures in the United States.

Inflation in the euro zone stood at 8.1% over one year in May, according to figures published Friday by Eurostat, which confirms its first estimate made at the end of last month.

Industrial production rose slightly in the United States in May. It rose 0.2% last month after rising 1.4% in April, according to figures released Friday by the Federal Reserve. Economists on average were forecasting a 0.5% gain in May.

The session should also be marked by the expiry of many types of ‘futures’ and options contracts, a conjunction known as the ‘four witches’ which usually promotes volatility in trading.

On the side of values, Oddo raises its advice on the title Air France-KLM, from ‘underperformance’ to ‘neutral’, while lowering its price target to 1.45 euros, against 4.4 euros previously.

‘ We are raising our estimates, especially for the 2022 financial year (+11% at the level of EBITDA and +9% vs consensus, EPS down following the capital increase), in order to integrate an improvement in yields at Q2 and Q3’, says the analyst.

Invest Securities confirms its neutral opinion on the Dassault Systèmes stock. ‘If we believe that most of the derating is behind us, our updated target at 32E (against 36E) does not offer any potential to go back to buying’.

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