(CercleFinance.com) – The Paris Stock Exchange (-0.2% to 5,910) started the 3rd quarter in a very laborious way and crumbled by -0.1% at 1 hour from the close (we are heading for a score -2.5% on a weekly basis), in a heavy European context (-0.4% on the E-Stoxx50, -0.1% on the DAX40).
Wall Street had reopened slightly down before heading up (+0.5%): but sharp downturn after 4 p.m. after the publication of the 2 leading activity indicators – the PMI and the ISM manufacturing – of the month of June: they both came out sharply lower and posted their worst scores since the beginning of summer 2020 (immediate period after confinement).
The red is again in place on the Dow Jones (-0.9%), on the S&P500 (-0.8%) which remains anchored around 3,750 Pts.
The ‘fact of the day’ is the spectacular easing of rates with ten-year Treasuries which fell significantly below the 3% mark (-14Pts to 2.345%) prolonging the decline started at the beginning of the week in a context of research of quality, which is explained by fears of an upcoming recession.
In Europe, further rate easing at an accelerated pace with -18pts on our OATs at 1.765%, Bunds -16pts at 1.2060%, Italian BTPs down -25pts towards 3.145%.
Such a scenario despite inflation at 8.6% proves that recession expectations are regaining the upper hand, which seems to be confirmed by the correction hitting the industrial metals compartment with -4% on copper and platinum, -5% on the money.
A strong sign of concerns about growth, oil prices are accelerating their decline, with a barrel of American light crude oil (WTI) which is currently yielding 3%, and a barrel of Brent is down -3.4% towards $110.8 .
Industrial metals fall by -3% on average (such as copper), platinum by -4%, silver by -5% towards $19.5.
Investors reacted negatively to the publication, at 4:00 p.m. in the United States, of the American ISM manufacturing index: it had been expected to fall sharply over the past month and came out at 53.4 against 54.5 expected (after 56.1 in May is a new low since June 2020).
Construction expenditure fell by -0.1% whereas it was expected to rise by +0.4%.
Confirming the global slowdown, the S&P Global PMI index also fell, to 52.7 from 57.0 in May, thus returning to its lowest level since July 2020.
‘The tensions on the production chains seem too strong and persistent to avoid a frank correction of the ISM’, warn the economists of Oddo BHF.
The other ‘shock figure’ of the day is the inflation rate, which soared to 8.6% in the Eurozone and thus returned to parity with the US inflation rate.
This would have been very unwelcome and precipitate the European indices below their annual supports.
Markets tried to reassure themselves with China’s manufacturing Purchasing Managers’ Index (PMI) coming in at 50.2 in June, down from 49.6 in May, according to sources. data published by the State Bureau of Statistics.
In the services sector, the IDA index stood at 54.7 in June, against 47.8 in May, according to the NBS.
For the record, an index above 50 points signifies an expansion, while an index below this level reflects a contraction in activity.
In France and Europe, the PMI indicators are more mixed. In France, the S&P Global PMI buyers’ index for the manufacturing sector fell from 54.6 in May to 51.4 in June, thus posting its lowest level for 18 months, pulled down in particular by a decline in new orders and production.
According to S&P Global, sharp price increases have translated into falling demand, while falling new orders and growing uncertainty have pushed production levels down.
In the euro zone, the final S&P Global PMI for the manufacturing industry stood at 52.1 in June, against 54.6 the previous month, and thus reflects the weakest expansion in the sector for 22 months.
Eurozone manufacturing conditions deteriorated at the end of the second quarter as production fell for the first time in two years, but S&P Global is seeing signs of stabilization in supply chains.
In the news of French companies, Sodexo publishes revenue for its third quarter 2021-22 of 5.5 billion euros, up 23.2%, including a contribution from acquisitions net of disposals of -1.7%, more than offset by a currency effect of +6.6%.
ArcelorMittal announces that it has completed the acquisition of an 80% stake in Voestalpine’s hot briquetted iron (HBI) plant in Texas, an acquisition that values local operations at $1 billion.
Finally, Worldline indicates that it has finalized the acquisition of Eurobank’s merchant acquiring activities, Eurobank Merchant Acquiring (EBMA), card acquirer on the dynamic Greek market, with a share of 21% of transaction volumes processed in the country.
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