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Markets: rebound in Europe, Wall Street at the lowest of the year


Updated with close of Oil and Wall Street

NEW YORK (awp/afp) – European stock markets rebounded on Friday after a nervous and negative week, but Wall Street reacted badly to a higher than expected inflation indicator and ended at its lowest level ever. closing year.

The Paris Stock Exchange took 1.51%, Frankfurt 1.16% and London 0.18% at the end of a month of September which ended in a loss of more than 5% for each of these European indices.

“The week was punctuated by fears about the stability of public finances against a background of very expansionary budgetary policy in the United Kingdom, the return of Italian risk, (…) a recession now inevitable in Germany (therefore in the euro zone) , and inflation in the euro zone which reached double digits at 10% in September”, comments Lysu Paez Cortez at Natixis Research CIB.

On Wall Street, the Dow Jones fell 1.70% and concluded at its lowest level at the end of the session since the beginning of November 2020, at 28,725.51 points. The Nasdaq index lost 1.51%, to its lowest closing since July 2020, at 10,575.61 points, and the broader S&P 500 index fell 1.48%, to 3,585.62 points.

The spread of rising prices continues to worry investors.

In the euro zone, inflation jumped again in September to reach 10% over one year, a new record fueled by soaring energy and food prices.

This development is pushing Europe to take steps to try to limit damage, with an agreement on emergency measures to help households and businesses cope with the explosion in bills.

The European Central Bank will also be watching this indicator closely as it prepares the market for further rate hikes in the coming months to stem rising prices.

In the United States, the monthly PCE price index, the most followed by the Fed, emerged up 0.3% in August, more than the 0.2% expected by analysts.

U.S. inflation slowed year on year in August but picked up again month on month, according to the PCE index, a measure of inflation watched by the Fed which has repeatedly hiked rates and is not will not fail to do so again before the end of the year.

Fed Vice Chair Lael Brainard warned on Friday that it would take time to see the full effect of inflation-fighting measures and that rates should continue to rise, especially as inflationary pressures additional ones cannot be excluded.

In this context of intense monetary tightening, the markets are pricing in the risks of recession and with just over a week before the results period, investors will examine from all angles the behavior of companies vis-à-vis inflationary pressures. .

The pound stabilizes

The dollar stabilized against the euro (+0.15%), at 0.9799 dollars, as well as against the pound (-0.34%), at 1.1157 dollars. The two currencies started the session up sharply before falling back.

On the energy side

Oil prices fell on Friday, the market still concerned about weakening demand and in a context of refinery maintenance, which the prospect of a possible production cut from the OPEC + cartel does not impress.

The price of a barrel of Brent from the North Sea for delivery in November, which was the last day of quotation and use as a reference contract, lost 0.59%, to close at 87.96 dollars.

A barrel of American West Texas Intermediate (WTI), also due in November, fell 2.14% to 79.49 dollars.

Nike is slowing down

US sporting goods giant Nike posted better-than-expected quarterly results on Thursday, but its margins are eroded by logistics costs, promotional operations to reduce inventory and currency effects.

Puma (-5.72%) and Adidas (-4.14%) suffered after the announcements of Nike whose action fell by 12.81%.

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