(CercleFinance.com) – The Paris Stock Exchange has literally been frozen for 3 p.m. at around -0.1% (at 7,392) after a weekly gain of nearly 3.5% last Friday.
The CAC40 had started the 3rd quarter (and second half) on a strong note (test of the absolute closing record at 22.370 on 22/05 on the CAC40 ‘GR’) before losing its meager residual gains following a slightly disappointing reopening of Wall Street: the Dow Jones crumbles by -0.1%, the S&P500 remains stable.
No reaction to the publication of a sharp decline in the American manufacturing sector to 46 against 46.9, for the eighth consecutive month in June, according to the results of a monthly survey published on Monday by the Institute for Supply Management (ISM) .
While the new orders sub-index climbed to 45.6, after 42.6 the previous month, that measuring production sank to 46.7 from 51.1, as did that of employment which dipped to 48.1 after 51.4 last month.
Another manufacturing PMI index published in the morning, that of S&P Global, came out in sharp decline, thus confirming the prospect of a possible entry into recession of the American economy in the second part of the year.
Volumes turned out to be reduced and trading very calm in New York on the eve of the celebration of July 4 (holiday), which will see trading close at 1:00 p.m. (7 p.m. Paris time).
Over the past week, the Dow Jones and the S&P 500 both gained 2%, as did the Nasdaq-100, which has just completed nine weeks of growth out of ten for a cumulative gain of nearly +20% and a performance of +39% which is quite simply the best in the history of this index.
With a gain of around 15% over the first half of the year, the S&P posted its fifth best first half since 1990 this year (after 1989 and 1999 for example), which is usually a good omen for the whole stock market year.
US investors will be able to refine, in the coming days, their judgment on the state of the American economy according to several statistics which could constitute the next catalyst to go higher, or on the contrary justify a consolidation.
In Europe, the final PMIs for the manufacturing sector led the start of the session today, knowing that their preliminary estimates had disappointed, showing numbers at the bottom since the start of the pandemic.
The HCOB PMI buyers’ index for French manufacturing, produced by S&P Global, recovered marginally from 45.7 in May to stand at 46.0 in June.
For the record, it is the threshold of 50 which separates the expansion and contraction of a sector’s activity for the PMI indices: the lower the index is below this threshold, the faster the rate of contraction.
The HCOB PMI for manufacturing in the eurozone fell from 44.8 in May to 43.4 in June.
Among the other macroeconomic indicators on the program for the week are the ISM services index in the United States, the latest ‘minutes’ from the Federal Reserve and the US employment report.
All of this data will allow market participants to build scenarios on the timing of interest rate hikes expected from the Federal Reserve, while recent statements by Jerome Powell, its chairman, have reinforced the hypothesis of at least two further rate hikes.
On the bond market, the tide is turning since relaxation prevailed until around 4 p.m. but rates are now deteriorating on 10-year US government bonds (from 3.82 to 3.835%), the German Bund and the OATs with the same maturity, a true reference rate in the euro zone, rose from -2 to +3 basis points at 2.425% and 2.965% respectively.
The situation continues to deteriorate for the British ‘Gilts’ with +8.5 Pts to 4.472%, real inflation in the United Kingdom being close to 11%.
On the currency side, the dollar continued its recovery against all the other major currencies and the euro lost a few fractions, -0.2% around 1.890 dollar.
The two crude oil benchmark contracts recovered around +1%: a barrel of Brent is trading at 75.7 dollars, while that of American light crude oil (West Texas Intermediate, WTI) is trading at 70.8 dollars.
The CAC40 remains supported by Total Energies with +2%, the Casino title which plunged -15% this morning (new low recorded at 3.22E) limits the damage with -6% now.
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