(CercleFinance.com) – The Paris Stock Exchange continues in the same register of volatility but what appears more clearly this Thursday is the failure to take into account the spectacular easing of rates in Europe (-20pts on our OATs) and the underperformance compared to Wall Street which is resolutely opting for an upward trend with +0.6% for the Dow Jones, +0.9% for the S&P500 and +1.4% for the Nasdaq.
And meanwhile, the CAC40 languishes with -0.4% (below 5,900) after posting up to +0.7% and testing 5,957.
This session is not only volatile and paradoxical, it is also characterized by an evaporation of volumes (E1.8bn traded only 45mn from the closing ‘fixing’).
The CAC40 is admittedly penalized by the sharp decline in banking stocks, like Societe Generale (-5.2%), BNP Paribas and Crédit Agricole (-4%) due to the vertical drop in bond yields since 48H.
The Euro-Stoxx50 is also looking gloomy (-0.5%), the DAX relapses by -1.3%, in the wake of industrial stocks as Germany begins to experience a shortage of gas which will require load shedding and a slowdown in production.
Wall Street (+1% on average) is obviously not affected by the fall in the growth of the activity of the American private sector: the composite PMI index of S&P Global slowed down significantly in June.
It stands at 51.2 in flash estimate – a five-month low – after 53.6 for the month of May.
In detail, the ‘Services’ PMI for June fell -2Pts from 53.6 to 51.6, and the ‘Manufacturing’ plunged from 57 to 52.4.
“This is the second weakest growth in activity since July 2020, with weaker service sector production growth accompanied by the first contraction in manufacturing production in two years”, specify the investigators.
Jerome Powell expects the United States to move closer to a recessionary scenario as the Fed will continue its ‘relentless fight’ against inflation, with higher rates helping to reduce demand – it is the new doctrine- in a context of shortage of energy, raw materials and components.
On the same theme, Robert Habeck, the German Economy Minister, gave a speech in the morning on the ‘securing of the country’s energy supply’ and warned that there is a shortage of gas and that we must prepare for a shortage economy, a drop in production rates in industry… and a further rise in gas prices in the coming months.
The morning’s statistics were not more encouraging for Europe.
Thus, the composite flash PMI index of overall activity in France fell from 57 in May to 52.8 in June, signaling the weakest expansion in French private sector activity since the start of the year. .
Same trend in the euro zone where the S&P Global composite PMI index fell from 54.8 in May to 51.9 in June, thus highlighting a second consecutive monthly slowdown in private sector growth in the zone, according to the flash estimate.
This weakening was notably the result of a deterioration in the performance of industry, with manufacturing production having fallen for the first time in two years, but the sharp deterioration in the performance of services was also confirmed.
“The impact of the thaw in demand accumulated during periods of confinement is already starting to fade, under the effect of the sharp increase in the cost of living and the drop in consumer and business confidence”, explains do we at S&P Global.
If the PMI indices therefore remain above 50 (as a reminder, the threshold of 50 constitutes the limit between expansion of activity – figure above 50 – and decline in activity – figure below 50) they testify to a clear slowdown in growth, both in France and in the euro zone.
In addition, in June 2022, the business climate in France darkened somewhat, given the synthetic indicator calculated by INSEE, which lost 2 points to 104, but thus remained above its long-term average. period (100). We will try to reassure ourselves with the barometer of the tertiary sector of the ‘services’ which takes +2 Pts to 108.
For its part, the employment climate deteriorated again in June 2022, for the third consecutive month: its synthetic indicator lost two points to 108, remaining well above its long-term average (100).
The equity markets are obviously not benefiting from the spectacular improvement in Treasury bonds in Europe: for the second consecutive session, our OATs are slackening very strongly: -21Pts on our OATs at 1.956%, the Bunds show -22Pts at 1, 4060% and Italian BTPs only -16pts at 3.4700%
Across the Atlantic, the upturn is also there with -13Pts on the ’10 years’ at 3.027, -16.5Pts on the ‘5 years’ at 3.065%, -15Pts on the ‘2 years’ at 2.906% and -8Pts ‘only’ on the ’30 years’ at 3.165%.
On the oil side, crude oil prices remain on a downward trend, overtaken by fears of an overabundance of supply with the looming economic slowdown. The Barrel of Brent is now trading around $111, the WTI is worth around $105.5 on the NYMEX.
In corporate news, banks are at the back of the pack, but St Gobain is not spared with -4.3%.
Valnéva is experiencing a new feverish surge with +25% towards 15E, Atos is bouncing back from +6 to +8% on rumors of a possible merger (takeover bid?) by its partner Thales.
Air Liquide and Siemens Energy announce the creation of a joint venture, in which they will hold 25.1% and 74.9% respectively, dedicated to the mass production in Europe of industrial-scale renewable hydrogen electrolysers.
TF1 announces that it has sold the digital marketing agency Gamned!, which specializes in programmatic media buying and has more than 160 employees in France and in six international offices, to the HLD fund.
Finally, Arkema and Unibail-Rodamco-Westfield (URW) announce that they have entered into a nine-year lease covering approximately 25,000m2 representing 80% of the Lightwell building in La Défense, where the chemical company will set up its new head office at the end of 2024, with nearly of 1200 employees.
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