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CAC40: falls below 5,900pts, Wall Street in the red


(CercleFinance.com) – The CAC40 ends the day with a decline of 2.39%, to 5,888 pts, on the eve of the ‘4 witches’ (not only quarterly but half-yearly deadline): no ‘remission’ is emerging to limit breakage on the eve of closing accounts, and selling pressure is increasing on ‘fragile’ or distressed securities that managers no longer want to see appear in their portfolios.

For its part, the E-Stoxx50 lost 2.7%, behind London and Frankfurt (-3.1%).

The fall in the Parisian index is all the more damaging as it began on a spectacular sell-off in electronic transactions during the night, the June CAC40 contract falling from 6,130 to 6,020 at the opening , then 5.870 three hours later: a linear slide of -250 Pts (-4%) which surprises the day after a double intervention by the FED and the ECB aimed at reassuring the markets.

The Paris Bourse widened its losses after the surprise announcement of a 50Pts hike in the key rate of the SNB (Swiss national bank) from -0.75% to -0.25% (with other hikes to follow). ) which totally eclipses the beneficial effects – and well received on Wednesday evening – of Jerome Powell’s remarks which allayed fears that the Federal Reserve would raise its rates too aggressively, even if a 75Pts hike was announced (which was in line with market wishes).

Jerome Powell hinted at his press conference that the intensity of rate hikes may slow as inflation indicators improve…and some easing is possible by 2024, after a peak around 3.4% at the end of 2022 and 4% in mid-2023.

Thus, after five consecutive sessions of decline, Wall Street had returned to the path of the rise on Wednesday evening, the indices having even accentuated their gains following the Fed’s monetary policy statement… but all these gains were largely erased as of the opening with -2.3% on the Dow Jones, -3% on the S&P500 and -3.7% on the Nasdaq.

Wall Street is not helped by the poor statistics of the day, with a fall of -14% in new housing starts and -7% in driver’s licenses.

The ‘Philly Fed’ precursor activity index is falling into negative territory (-3.3 at its lowest since the major lockdown in May 2020) when it was expected to be slightly above 0.00; the new orders indicator fell 35 points to -12.4. Also at half mast, the shipments index lost 25 points, but remained positive at 10.8.

Tonight, the yield of the 10-year US slackens marginally by around 3.32% (against 3.297/3.30% last night and 3.495% this morning).

The bond market in Europe only experienced a few hours of improvement on Wednesday before deteriorating again spectacularly, the yield of the German Bund has just fallen from 1.645 to 1.745% (and 1.92% around 1:45 p.m.) while the yield of the French OAT rose from 2.22% to 2.30% (with dizzying intraday volatility for a large spread of 2.20/2.484%).

For the record, the ECB yesterday unveiled a new support instrument for the most indebted countries in the euro zone in order to combat the resurgence of the risks of fragmentation between the bond yields of northern and southern countries… specialists fear that the ECB resells Bunds within the framework of an arbitration for the benefit of Italian BTP which – only positive point – stabilizes a little below 4%, around 3.93% (against 4.15% Tuesday evening) but that makes still +21pts of ‘spread’ against the Bund against a gap of 150pts which seems suitable for the boss of the Italian Central Bank.

On the Forex side, the euro is trading against $1.0504, and the main market movement of the day naturally concerns the Swiss Franc which jumped +2.5% towards $0.9690 and +2.1% against the Euro towards 1.0170.

On the side of values, Engie unscrews by -7.3% while gas is scarce (after closing the Russian tap) and leads Véolia (-3.5%).
Saint Gobain fell -6.5%, ST-Micro -6.2%.

Rexel organized a Capital Markets Day today from Zürich. The group is targeting like-for-like sales growth of between 7% and 9% in 2022 (compared to 4% to 6% previously), an adjusted EBITA margin of around 6.7% including 50 bps of positive non- recurring costs linked to inflation (against above 6% previously) and a conversion of free cash flow above 60%.

Suez would like to make a takeover bid for its former waste activities in the United Kingdom according to the FT. This operation would be carried out in the event that the British competition authority blocks the takeover by Veolia. The transaction would be several hundred million pounds according to the FT. ‘Suez would have a right of first refusal if this activity were to be sold by Veolia’ indicates Invest Securities.

Finally, Thales, in collaboration with the company Zelenza, was selected by the Spanish Ministry of the Interior to supply more than 1,500 border inspection units. These units will be equipped with document readers, fingerprint scanners and facial modules with a facial capture system

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