(CercleFinance.com) – The Paris Stock Exchange reduced its losses a little, from -1.2% to -0.8% to 6,555.
But that does not change the fact that the CAC40 resorted to the bottom of the corridor 6,600/6,660 after 3 days.
The Euro-Stoxx50 fell only -0.4% as the DAX acted as a shock absorber with a score close to balance 40 min from the close.
Wall Street has been showing a fairly marked decline since 3:30 p.m. and the scores have changed little: -1.1% for the S&P500 and the Nasdaq, -0.8% for the Dow Jones.
US ‘futures’ were already down -0.7% before a surge of ‘stats’ from 2:30 p.m.
The signals of economic slowdown are multiplying in the United States, and this is rather ‘good news’ for those hoping for a relaxation of the Fed’s strategy.
However, James Bullard does not seem to share this opinion and reaffirms that key rates should be raised to 5%, and that true monetary orthodoxy would even imply rates at 7%!
JP-Morgan, in a strategic note, also expects rates to be 5% from March 2023 then a start of easing at the start of 2024, at a rate of -50Pts per quarter (therefore 3% at the end of 2024).
The Commerce Department reported a 4.2% contraction in housing starts in the United States last month, to an annualized 1,425,000, a level broadly in line with economists’ expectations. This is the 4th consecutive month of decline, this is unprecedented since 2007.
Similarly, building permits for American housing – supposed to prefigure future housing starts – fell by 2.4% to 1,526,000 at an annualized rate in October, again roughly in line with the market consensus.
Economic activity in the Northeast has contracted for a third consecutive month, shows the latest monthly business survey from the Philadelphia Federal Reserve.
The so-called ‘Philly Fed’ index – considered the most relevant leading indicator of the health of the American economy – sank more than 10 points, to -19.4 in November against -8.7 the month last, while economists saw it go up around -5.
The new orders sub-index was little changed, at -16.2, while the employment index fell, while indicating continued hiring.
The price paid component also remains in an upward trend.
Surprisingly, despite the massive layoffs announced in ‘tech’ at the start of last week (by ‘carts’ of 10,000 at emblematic Nasdaq giants), unemployment benefit claims in the United States fell by 4,000 during the week of Nov. 12, standing at 222,000 from 226,000 the previous week, according to weekly data from the Labor Department.
However, the four-week moving average rose 2,000 week-on-week to 221,000. Finally, the number of people regularly receiving benefits increased by 13,000 to reach 1,507,000 during the week of 5 November.
Consumer prices in the euro zone for the month of October were revised slightly downwards, to +10.6%.
The main economic news of the day comes from the United Kingdom with a program to increase taxation in all directions, in particular on dividends and the profits of energy producers, with taxation increased to 35% against 25% for oil groups and from 25 to 45% on electricity producers (from January 1, 2023 to December 2028).
The United Kingdom will face at least 2 difficult years: the OBR (Office for Budget Responsibility, an independent Treasury body responsible for evaluating public finances and the economy) now forecasts a 1.4% drop in domestic product (GDP) in 2023, i.e. a 180° turn since this same OBR forecast last March on growth of 1.8%.
Inflation should average 9.1% over the whole of this year before moderating to 7.4% next year, which remains very penalizing for households.
In the longer term, the OBR anticipates GDP growth of 1.3% in 2024 and +2.6% for 2025 against previous estimates of +2.1% and +1.8% (2025)
The ‘Gilts’ deteriorated by +8Pts towards 3.22%, the bond markets in the Euro zone consolidated more slightly after their upturn the day before: +2Pts on our OATs and on the Bunds at 2.508% and 2.026% respectively.
The T-Bonds resume for their part +10Pts to 3.79% (the comments of James Bullard somewhat shower the scenario of the imminent ‘pivot’ of the FED).
The Dollar regained strength, the Euro retreated symmetrically by -0.7% towards $1.0335.
If the general trend seems to remain favorable to equities, market operators will keep a close eye on upcoming geopolitical events and should not increase their risk taking in the immediate future.
This uncertainty could lead investors to be cautious regarding a market that has risen sharply in recent weeks. Since the end of September, the CAC 40 has posted an increase of around 17%.
In corporate news, Alstom (-4.3%) announces that it has been awarded the contract to design, manufacture, supply, test and commission 312 standard gauge coaches for the extension of the IV of the Delhi metro, order for an amount of 312 million euros.
La Française des Jeux (FDJ) confirms that it anticipates an increase in turnover of more than +8% for 2022 as well as an EBITDA margin rate of around 24%, and says that it is confirmed in its financial objectives 2025. The group is thus aiming for average annual revenue growth in 2022-25 at the top of a range between +4% and +5%.
Stellantis has announced that it is accelerating its research into autonomous driving through the acquisition of aiMotive, a Hungarian start-up specializing in AI and autonomous driving. This purchase should boost the development of STLA AutoDrive, the group’s autonomous driving technology platform, in the medium term.
Finally, Bouygues publishes net income group share down by a third to 537 million euros for the first nine months of the year, but a current operating margin (COI) stable at 4.1% for a figure of business up 8% to 29.7 billion (+4% organically).
Copyright © 2022 CercleFinance.com. All rights reserved.
Did you like this article ? Share it with your friends with the buttons below.
