(CercleFinance.com) – The Paris Stock Exchange (-0.3 to -0.4%) seems a little frozen on the decline in the 6,200 zone: the CAC tipped into the red around 3 p.m. with the publication of forecasts – revised downwards- from the IMF.
The CAC40 fell by 6,240 points on Tuesday at the start of the session to 6,200 (-0.5%).
In Frankfurt, the drop exceeds -1% and the Euro-Stoxx50 slides towards -0.9% (3,575).
On Wall Street, the session started in the red with -0.7% on the S&P500 and -1.3% on the Nasdaq, but -0.2% on the Dow Jones (deemed more defensive).
IMF figures point unambiguously to a recession scenario in the second half: global growth is revised down by more than 10% (from 3.6% to 3.2%). US growth suffered the strongest revision (rate hike obliges) with -38% (from +3.7% to +2.3%), China suffered -25% (from 4.4 to 3.3% ) and Europe is the zone which ‘does the best’ with a revised GDP of ‘only’ -0.2% towards 2.6% (but taking into account the contraction of activity in Germany and Italy, these +2.6% still seem very optimistic.
The IMF, on the other hand, estimates that Russia will be less affected than expected by Western sanctions and anticipates a recession of limited magnitude (and more than -8%).
Unsurprisingly, the interest rate markets reacted swiftly and yields fell sharply: OATs erased -11Pts to 1.51% (the floor of 1.615% is therefore largely sunk), Bunds posted -10.5Pts to 0 .91% (the 1.000% threshold moves away sharply) and Italian BTPs retreat, but only -7pts to 3.325%.
Across the Atlantic, the T-Bonds also eased by -10Pts towards 2.72%, on the eve of the highly anticipated meeting of the Federal Reserve.
The Fed, whose monetary policy committee begins a two-day meeting today, is expected to stick to its tightening trajectory in a context marked by a general deterioration in the economy.
While most market participants expect the central bank to raise rates again abruptly, opting for a 75 basis point hike, some analysts say the institution is struggling to take full measure. of the current situation.
‘The Federal Reserve is driving looking in the rear view mirror as the recession waits around the next corner,’ laments Thomas Costerg, economist at Pictet Wealth Management.
According to the professional, the soft landing promised by the central authority will certainly not take place.
“The market is also starting to doubt it, predicting rate cuts from next year”, he underlines (the market expects a reversal of the cycle in July 2023).
According to Thomas Costerg, the Jackson Hole seminar – which will be held at the end of August – could begin to calm the enthusiasm of the Fed and encourage it to slow down the pace of its monetary tightening.
The two US statistics on today’s menu, namely the Conference Board’s consumer confidence and new home sales: the S&P Case Shiller index of house prices in the 20 largest US cities slows to 20.5% in May after an increase of 21.2% in April.
First signs of recession are emerging very clearly on the side of the residential real estate market, already characterized by an overflow of inventories which should only worsen in view of the tightening of credit conditions
As for US consumer confidence, it further deteriorated by -2.7 Pts in July, to 95.7 according to the Conference Board’s monthly survey published on Tuesday.
The sub-index measuring the judgment of consumers on their ‘present situation’ also fell by almost -6 Pts to 141.3, against 147.2, and the
the ‘expectations’ component fell from 65.8 to 65.3… which is much more modest.
Apart from macroeconomic issues, investors will also be looking at a series of corporate results, with the pace of publications set to accelerate sharply over the coming days.
On the exchange side, the Euro fell heavily (-0.9% to 1.013) while Gazprom is going to drastically reduce the quantities of gas delivered to Germany.
On the side of values in Paris, Faurecia relapses by -7%, Soitec by -6%, Véolia by -3.5%, Renault by -3%.
Dassault Systèmes Confirms Fiscal 2022 Non-IFRS Revenue Growth Target of 9-10%, but Increases its Non-IFRS EPS Target Range to 1.08-1.10 euro, i.e. 14 to 16% growth. At 1.38 billion euros, its turnover increased by 19% in published data and by 11% at constant exchange rates.
Rémy Cointreau posted revenue of €409.9 million in its first quarter 2022-23, up 39.9% as reported and 27% organically (after organic growth of 105% achieved in year ago).
Eutelsat (-19% at 7.00E at its lowest, i.e. -36% in 48 hours) formalized on Tuesday the signing of a memorandum of understanding to merge with its partner OneWeb. The transaction, which will take the form of an exchange of OneWeb shares for newly issued Eutelsat shares, values OneWeb at approximately $3.4 billion, based on a value of 12 euros per Eutelsat share, including dividend.
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