(CercleFinance.com) – The Paris Stock Exchange fell 1.20% at the close, to 6,352 points, in the wake of the E-Stoxx50 (-1.5%) or Frankfurt (-1.3 %) while London lost nearly 1%.
The decline is even more marked across the Atlantic where S&P500, Dow Jones and Nasdaq yield between 2.3% and 3% each. The rise in the VIX (known as the ‘fear index’ measuring volatility) also illustrates the prevailing nervousness: the index gains nearly 11%, around 29 (as a reminder, the market is said to be calm below 20 and nervous above 30).
After four rising sessions in Paris over the last six trading days, investors therefore want to be cautious. And will have to be patient.
Thus, ‘we assume that equities will move forward once they have integrated the new monetary deal and removed the exaggerated risks of a recession’, reminded this morning the strategists of Danske Bank.
‘What happened yesterday is a good illustration of these two elements, since the economic statistics and the unsurprising intervention of Powell helped to boost the morale of investors,’ added the Danish bank.
At Aurel, however, we note that investors are increasingly concerned about global growth, with optimism at an all-time low, according to a survey conducted in May.
It is in this context that yesterday, the President of the Fed assured that the central bank would continue to raise its key rates as long as inflation will not be back under control.
He also confirmed that rate hikes of 50 basis points would be considered at the next two meetings of the institution, implicitly ruling out the scenario of a 75-point hike so feared by the markets.
‘The big news is that Powell thinks the financial markets are adjusting quite well to the new Fed policy,’ argues Danske Bank.
However, the prospect of upcoming rate hikes has triggered a new episode of volatility in the bond markets, which could prevent the equity markets from reacting favorably to the good news.
The yield on 10-year US Treasuries climbed to 2.98% yesterday, approaching the psychological threshold of 3% closely followed by investors.
These tensions raise fears of an increase in the cost of corporate financing, but also of credit for individuals, which could end up penalizing growth.
At the end of the morning, investors had already been able to take note of the latest inflation figures in the euro zone. This statistic, which is still closely scrutinized and awaited by operators, reveals that an annual inflation rate of 7.4% in April 2022, stable compared to March, according to Eurostat.
The largest contributions to the zone’s annual inflation rate came from energy (+3.70 percentage points, pp), followed by services (+1.38 pp), food, alcohol and tobacco ( +1.35 pp) and industrial goods excluding energy (+1.02 pp).
In the news of French companies, Air Liquide announces the signing of a ten-year contract with Shell Energy Europe Limited (SEEL) for the purchase of renewable energy intended to supply the production of industrial and medical gases in the northeast of Italy.
TotalEnergies announces the signing of a commercial agreement with New Hope Energy, which will build a chemical recycling plant in Texas to convert plastic waste into a recycled raw material, part of which will be sold to TotalEnergies.
Carlos Tavares, the general manager of Stellantis, declared that the automotive group intended to develop and strengthen its presence in India, a market considered “strategic” which constitutes a central pillar of the international ambition of the group.
Elior Group published for its first half of 2021-22 a net income group share of -266 million euros, against -53 million a year earlier, and an adjusted EBITA from continuing operations of -16 million, compared to -25 million a year ago. The catering and services group achieved a turnover of 2.24 billion euros, with organic growth of 18%.
Bouygues announces the successful placement of its bond issue for a total amount of two billion euros comprising two tranches of one billion each at seven and 15 years, bearing coupons of 2.25% and 3.25% respectively.
Copyright © 2022 CercleFinance.com. All rights reserved.
Did you like this article ? Share it with your friends with the buttons below.
