CAC40: limits its losses despite high post-NFP rate tension

( – The markets are regaining a little confidence after considering the US employment figures too robust (+528,000 instead of 250,000 expected) and the Paris Bourse erases half of its losses, rising from 6,450 to 6,483 (-0.45%).
The Euro-Stoxx50, which was down -1% (3,720) only lost 0.5% to 3,735. Wall Street posted the most spectacular recovery since the Nasdaq managed the feat of returning from -1.5% to equilibrium, before then collapsing by -0.5%, the Dow Jones erasing its -0, 8%, the S&P500 crumbling by -0.3%.
Note that London is the only place in the green this Friday with +0.1 to +0.2%.
The Dollar jumped +0.8% against the Euro towards 1.0160 and +1.1% against the Pound (the United Kingdom will be in recession for 4 quarters according to the BoE which forecasts a negative GDP of -1.5% in 2023).

The monthly report on employment in the United States indicates that the US economy generated 528,000 non-farm payrolls in July (372,000 in June). The Department of Labor also revised job creations for the previous two months upwards, from 384,000 to 386,000 for May and from 372,000 to 398,000 for June, for a total revision balance of +28,000.
The other big surprise is the unemployment rate, which fell by 0.1 point to 3.5%, thus returning to its pre-Covid level, at the start of February 2020.

The labor force participation rate stood at 62.1%, a level which nevertheless remains 1.3 points lower than in February 2020, and the average hourly income increased to a annual rate of 5.2%.
The labor market therefore remains one of the last major drivers of the American economy to hold firm, with job creations still solid and an unemployment rate that remains at a very low level, reflecting a situation of full employment. .

The prospect of a multiplication of rate hikes by the Federal Reserve is growing and the bond markets are reacting negatively: the T-Bonds are tightening by +17Pts towards 2.845%, which completely erases the gains of the week.

According to CME Group’s FedWatch Barometer, the market estimates a 65% chance of a 50 basis point Fed hike next month and a 40% chance of a quarter point hike .
In Europe, our OATs and Bunds rebounded from +12Pts to +13Pts, to 1.475 and 0.9300% respectively, BTPs posted only +7Pts to 3.008% (the ‘spread’ was reduced to just +207Pts compared to the Bund).

Investors were able to learn this morning of an increase in production in June 2022 in the manufacturing industry in France (+1.2% after +1%) as in industry as a whole (+1 .4% after +0.2%), according to data adjusted for seasonal variations and working days (CVS-CJO).

INSEE, which publishes these figures, specifies that production is increasing again in capital goods (+3.5%) and transport equipment (+2.8%), and rebounding in extractive industries, energy , water (+2.4%) as well as in the food industry (+2.2%).

Production in the second quarter of 2022 is higher than that of the same quarter of 2021 in the manufacturing industry (+2%). For industry as a whole, the increase was significantly more moderate (+0.2%) due to the fall in energy production.

France’s current balance of payments deteriorated sharply in the second quarter, mainly due to higher energy bills, data released by the Banque de France showed.

The current account deficit stood at 8.6 billion euros in CVS-CJO data over the quarter, a deterioration of 7.5 billion compared to a first quarter that was already in deficit (-1.1 billion).

In addition, France’s trade balance showed a deficit of nearly 13.1 billion euros for June, compared to a deficit of 12.9 billion the previous month, according to CVS-data. CJO of the Customs Administration.

As the earnings season draws to a close, a few European heavyweights are also due to unveil their quarterly accounts today, including German insurance giant Allianz.

In the news of values, Téléperformance brings up the rear with -6% to 309.5E, Publicis yields -3.3% and consolidates its recent rise.
Rothschild & Co publishes for the first six months of the year, net income group share down 28% to 249 million euros, i.e. EPS of 3.43 euros, despite revenues up 2% to nearly 1.38 billion euros.

Maurel & Prom publishes for the first half of 2022 a net profit of 138 million dollars, more than quadrupling in annual comparison (32 million a year earlier), and a gross operating surplus of 250 million, up 113%.

Finally, Sanofi announces the establishment of a collaboration with the Innovent Biologics laboratory, which has a large footprint in China, aimed at making innovative drugs available to patients suffering from difficult-to-treat cancers in this country.

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