(CercleFinance.com) – Investors take a breather: the CAC40 only lost 1% and recrossed 6,200.
Wall Street has just reopened down limited from -0.7 to -0.9%.
After losing more than 3% last week, the Paris Stock Exchange had started the week badly (losing up to -2% to 6,153), in the wake of the air pocket of -3 to -3.5% US indices on Friday, with Wall Street reacting negatively to Jerome Powell’s ‘hawkish’ speech.
This week promises to be loaded with economic indicators: the stock markets are preparing for a potentially decisive comeback, which will culminate on Friday with the job creation statistics in the United States, still closely followed by investors.
Jerome Powell, the head of the Fed, reaffirmed last Friday at the Jackson Hole symposium that the central bank intended to use ‘vigorously’ all its tools to fight inflation.
The chairman of the Federal Reserve has acknowledged that this fight against inflation could slow down growth in a lasting way and hurt American households.
Unsurprisingly, the prospect of a possible acceleration of the institution’s monetary tightening has once again weighed on Wall Street since mid-August.
By giving up nearly 4% over the whole of the past week, the S&P500 had signed a second consecutive week of decline.
Investors now fear that monetary firming will intensify despite weakening economic indicators.
Before Friday’s main course, the market will have other indicators to eat, including the latest inflation figures in the euro zone, expected on Wednesday.
Better-than-expected numbers would surely bolster the prospect of a major rate hike, perhaps 75 basis points, from the ECB next week.
Investors also remain attentive to the situation on the energy market, which particularly penalizes the euro (-0.5%), now blocked below the parity threshold against the dollar: it is moreover flirting with its 20-year low, around $0.9915.
The Euro does not even benefit from a sharp rise in yields with an OAT which displays +10.5 Pts of base at 2.1050% or a Bund which displays +9 Pts at 1.4880% (the US T-Bonds tend from +5pts to 3.0850%.
Under such conditions, it seems unlikely that the equity markets will be able to sustain a lasting return to a little serenity.
The CBOE volatility index, the most followed barometer of the state of mind of investors in the United States, rose again on Friday above the 25-point mark.
VIX futures indicate that the ‘fear index’ may rise further in the coming months.
The history of Wall Street in this respect encourages caution for the coming weeks: with an average loss of 0.5% according to the Stock Trader’s Almanac, September is traditionally the worst month of the year for American equities.
On the securities side, TotalEnergies announces the signing of a commercial agreement between Northern Lights – a project co-owned equally with Equinor and Shell – and Yara for the transport and sequestration of CO2 captured on the Yara Sluiskil site, ammonia plant and fertilizer located in the Netherlands.
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