(CercleFinance.com) – European markets are having a hard time digesting the shock of American inflation, but with -0.7% after -1.3% the day before, the CAC40 is in reality only down -2% in 48H against double for the ‘S&P’ and the ‘Dow’, and -5.2% on the Nasdaq, unheard of since March 2020.
When quotations resume, the Dow Jones grabs +0.1%, the S&P500 and the Nasdaq +0.2%… it’s very fragile.
Paris is not doing so badly and the CAC40, down on contact with 6,200, does not threaten the support level of 6,150: nothing prohibitive and no sales ‘at all costs’ as could be observed on some Nasdaq techies on Tuesday night.
Fears of seeing the rise in prices slow less sharply than expected reinforced the prospect of an amplification of the monetary tightening cycle initiated by the Federal Reserve, a major theme at the moment.
These worries, combined with threats of an imminent recession, meant that New York erased almost all of the gains recorded during its rebound in early September.
This correction phenomenon has logically spread to Asia, where the Nikkei index of the Tokyo Stock Exchange dropped more than 2.6% this Thursday at the end of the session, a score also posted by the Hang Seng index of Hong Kong.
At the same time as the fall in equities, the climate of tension on inflation is reflected in an increase in volatility and a rise in bond yields.
The CBOE Volatility Index VIX, popularly known as the ‘fear barometer’, jumped 14% yesterday, the highest since August’s market turmoil, and Treasuries yielded ten years evolves around 3.43%, that of the ‘1 year’ tests 4.00% (3.9800%, i.e. +28Pts in 24H), the ‘2 years’ peaks at 3.8%, the highest since October 2007.
After the cold spell in the ‘CPI’, an easing could have occurred with the publication of the ‘PPI’ but this is not the case: inflation has eased to the margin (-0.1%) and this is not apparently neither good nor bad news.
According to figures from the Department of Labor, producer prices in the United States fell slightly ‘overall’ (to 8.7%) but they increased by 0.2% (to +5.8%) excluding food , energy and commercial services, rates broadly in line with expectations.
The most striking figure on 09/14 is the decline in seasonally adjusted industrial production: -2.3% in the euro zone and -1.6% in the EU, compared to June, according to Eurostat .
Compared to July 2021, industrial production fell by 2.4% in the euro zone and by 0.8% in the EU last July. For June, the annual rate of change was revised from +2.4% to +2.2% in the euro zone and remained unchanged at +3.2% in the EU.
A little respite across the Channel with the rise in consumer prices in the United Kingdom: it fell to 9.9% over one year in August, after +10.1% in July, according to official data published on Wednesday.
Investors will also be watching today for the release of the New York Fed’s Empire State index.
Then it will be the turn of the Philadelphia Fed index, retail sales and import prices, to mention only the most important appointments.
On the foreign exchange market, the dollar regained ground against the euro, which went back below the parity threshold, due to the strengthening of the prospects for rate hikes on the other side of the Atlantic.
On the securities side, Stellantis and General Motors Holding, a subsidiary of General Motors Company (GM) have signed a share purchase agreement relating to 69.1 million ordinary shares of Stellantis, representing approximately 2.2% of the capital. share capital of Stellantis (on a diluted basis), that GM is entitled to subscribe upon exercise of the stock warrants (BSA) initially issued by Peugeot SA (PSA) to GM in 2017.
Berenberg reiterated his recommendation to ‘hold’ on Sanofi on Wednesday, while reducing his target price from 110 to 91 euros. The analyst justifies his lowering by the prospect of seeing the laboratory having to pay 12 billion euros in the context of the trials concerning Zantac.
Oddo maintains its Outperformance recommendation on the orange stock with a price target of €13.3. The analyst points to the slowdown and certain malfunctions in the deployment of fiber in France. Despite everything, the recent decline offers, according to Oddo, an entry opportunity with the acceleration of EBITDAaL growth expected in the last quarter of 22 (to 6-7%).
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