(CercleFinance.com) – The Paris Stock Exchange is enjoying a ‘saloon door’ type session since, after an opening down -0.7%, the CAC rose by +80Pts in 40 minutes from 5,745 to 5,828, then backtracked by -90 Pts to a floor at 5,736, before bouncing back to 5,800 points (+ around 0.25%).
By dropping nearly 5% last week, the CAC 40 has in turn smashed the key supports of 6000, 5900 then 5800 points to now find itself at annual lows.
The Euro-Stoxx50 and the DAX also returned to positive territory (+0.6%) after a turbulent start to the session.
Wall Street posted contrasting performances with -0.3% on the Dow Jones, +0.3% for the SaP500 and +1% on the Nasdaq in the wake of Amazon (+2%) and Apple (+1.5 %).
The London Stock Exchange (the ‘City’) also reversed steam and went from a loss of -1% at midday to +0.4% 40 minutes from the close.
All against the background of a bond crash (+36Pts at 4.185%, +100Pts in 4 sessions, +200Pts in 4 weeks) and the collapse of the Pound Sterling by -5% to around $1.0385 (unexplained flash crash between 2:55 and 2:59 morning), before a recovery towards equilibrium at $1.0860.
Such volatility is historic and speaks volumes about market jitters as the UK runs up deficits.
Moreover, the resounding victory won by Giorgia Meloni and his identity party Fratelli d’Italia, renamed post-fascist by the media after the legislative elections in Italy, seems to justify renewed caution, even if the threat of a The country’s exit from the euro zone seems a priori ruled out.
The desire displayed by the far-right party to follow the budgetary rules imposed by Brussels and to keep its commitments is likely to reassure investors, say economists.
It is true that with 191 billion euros in endowments to come, the country should be one of the main beneficiaries of the European recovery plan ‘NextGenerationEU’.
Moreover, Meloni seems – according to observers – better surrounded economically than other figures of the extreme right, such as Matteo Salvini.
In this context, investors are closely monitoring today the evolution of the yield spread between the 10-year government bonds of Italy and Germany, considered as a barometer of risk in the monetary union. .
This is not going well since if the Bund shows +6Pts towards 2.095% (and our OAT +7Pts at 2.677%), Italian BTPs deteriorate by +13Pts to 4.4920%, i.e. +240Pts, which is close to the worst levels since 2018 (+300Pts) and even for 10 years and Mario Draghi’s ‘whatever it takes’.
Note that the incredible – and inexplicable – movement on the FOREX between 2:55 and 2:59 did not spare the Euro, which plunged -1% from 96.6 to 95.6.
Even after a return to equilibrium around $0.9670, the Euro is still likely to break through the floor of 0.9700 dating from the summer of 2002.
Another ‘shock’ event, the Ifo business climate index in Germany, which was expected to fall like the worrying PMIs published last week, fell more sharply than expected in September, from 88.6 points to 84.3.
A deterioration that leaves little doubt about the reality of a recession in the country this winter: the business climate index of the Munich institute Ifo, falls to the lowest level in nearly two and a half years (April 2020 and the economic lockdown adopted to fight the pandemic).
Market participants appear to have no choice but to adopt cautious stances ahead of the release of numerous indicators over the coming days, including the latest eurozone inflation data whose recent firming has worried markets over the timing. monetary tightening by the ECB.
The theme of inflation has dominated the financial and media debate for many months, but this situation is not destined to last, according to specialists.
The latest surveys show an easing of pressure on global supply chains and production costs, leading to a downward revision of inflation expectations.
And although wage growth should pick up further in the Eurozone, aggressive monetary tightening by the ECB should be an important driver for gradual disinflation.
On the side of values, Véolia and Engie bring up the rear with -2.4% on average.
TotalEnergies has once again been selected as the first international partner by QatarEnergy for the North Field South (NFS) LNG project, with a capacity of 16 Mt/y.
TotalEnergies will obtain a 9.375% stake in the NFS project – out of a total of 25% available to international partners – while the national company QatarEnergy will hold the remaining 75%.
Marc Ladreit de Lacharrière, Rodolphe Saadé and Stéphane Courbit would have proposed the price of 20 E per share for the buyout of Bertelsmann’s stake in M6 according to Bloomberg. This price represents a premium of 39% on the last price of M6 underlines Invest Securities. Daniel Kretinsky and Xavier Niel, associated with MediaForEurope, would also have presented an offer according to the press agency.
Stifel confirms its recommendation to sell Elior shares (-24% to 2.04E) and reduces its target price from 2.80E to 2.20E. ‘ We see significant downside risk to consensus expectations, reflecting the combination of the inflationary environment, labor shortages, one-time costs following the arrival of the new CEO and rising interest rate ‘, points the analyst.
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