by Claude Chendjou
PARIS (Reuters) – Wall Street fell late Friday morning in New York while European stock markets ended in the red the last session of a year marked by geopolitical tensions, a rapid rise in interest rates to curb a high inflation, a deterioration of the economic situation and fears about the health situation in China.
In Paris, the CAC 40, which gave up over the whole year 9.46%, ended down Friday by 1.52%, at 6,473.76 points. The German Dax, down 12.34% over one year, lost 1.05% at the close. The British Footsie, the only major European index to have recorded an annual gain of 0.91%, ended the session down 0.81%.
The EuroStoxx 50 index fell by 1.47% and the FTSEurofirst 300 by 1.27%. The Stoxx 600, down 12.90% year on year, its biggest contraction since 2018, fell 1.27% on the session.
While investors have been chafed throughout the year by an accelerated tightening of policies by major central banks in order to combat persistent inflation, following the post-COVID recovery and then the war in Ukraine, the aversion to risk dominated trading for the last session of 2022, before a year 2023 which could be a continuation of the previous one.
“Investors enter 2023 with a cautious mindset, prepared for further rate hikes and expecting recessions around the world,” wrote Craig Erlam, analyst at OANDA.
In addition to a peak in contamination by the SARS-Cov-2 virus expected in China next month on the occasion of the Lunar New Year which favors long-distance travel, the markets anticipate a continued rise in the cost of credit in Europe and the States States, at the risk of a profound deterioration in the economy.
US Federal Reserve (Fed) rates, which were raised 425 basis points between March and December, the fastest pace since the 1980s, could peak at 4.96% in mid-2023, according to the FedWatch barometer. . In the eurozone, where the European Central Bank (ECB) deposit rate was still negative last spring, investors expect it to rise to 3.4% next year.
VALUES
In Europe, none of the major compartments of the rating escaped the red, one of the most marked declines being for the new technologies sector (-1.79%).
In Paris, the luxury sector, very exposed to China, suffered: LVMH lost -2.3833% and Hermès -2.6936%.
In the news of listed companies, Telecom Italia (TIM) fell 3.78%, the President of the Italian Council Giorgia Meloni having reaffirmed Thursday that the State had every intention of taking control of the fixed network of the incumbent Italian telecom operator to, she says, preserve jobs.
AT WALL STREET
At the close in Europe, the Dow Jones fell 0.71%, the Standard & Poor’s 500 0.79% and the Nasdaq 0.88%. These last two indices are expected to show their largest decline for the year since the 2008 financial crisis.
On the stock side, Apple, Amazon, Alphabet and Meta Platforms fell 0.66% to 1.47% in the wake of rising US bond yields.
Shaw Communications soared 9.32% after the approval in Canada of the merger agreement with Rogers Communications for 14.8 billion dollars.
CHANGES
On the foreign exchange market, the dollar retreated Friday by 0.11% against a basket of reference currencies. The greenback, up at this stage by 8% over one year, should however record its best performance for the year as a whole since 2015.
The euro, up 0.21% on Friday to 1.0683 dollars, is heading for an annual loss of 6%, due to weak growth in the euro zone, the war in Ukraine and a slower rise in ECB interest rates compared to the Fed.
The pound sterling, up 0.04% to 1.2057 dollars, could however lose 10.7% against the greenback over the whole of the year.
RATE
In the bond market, the ten-year German Bund yield, which gained more than 260 basis points this year, ended the session with a gain of around ten points, to 2.56%, in the prospect of continued monetary tightening by the ECB after recent statements by Isabel Schnabel and Klaas Knot, two members of the Frankfurt institution.
The German two-year-old advanced 6.7 points to 2.73%.
In the United States, the yield on ten-year Treasury bills takes around five basis points on Friday, to 3.89%, on its way to a gain of 239 points for the whole of 2022, which would be its strongest. annual progression since at least 1953, according to Refinitiv data.
The American two-year-old gains 6.3 points, to 4.42%.
OIL
Oil prices are heading for a second consecutive year of gains at the end of a year 2022 of high volatility against a backdrop of geopolitical tensions and concerns about Chinese demand.
Brent, which is posting an annual gain of 8% at this stage after an increase of 50% in 2021, took 0.78% on Friday, to 84.11 dollars a barrel.
US light crude (West Texas Intermediate, WTI), up around 5% year on year after a 55% gain in 2021, rose 0.57% on Friday to $78.85.
(Written by Claude Chendjou, edited by Camille Raynaud)
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