The Paris Stock Exchange is lining up a fourth session of increases in a row, driven, like yesterday, by the decision of the new British Finance Minister (before that, there had been rumors and then the dismissal of the former Chancellor of the Exchequer) to abandon the unfunded tax measures announced, as part of a growth plan, by his predecessor, causing chaos on the debt market across the Channel, with systemic repercussions, beyond the borders of the Kingdom.
the Bedroom 40 gained 0.44% today, to close at 6,067 points, in trading volumes which, however, remained weak. At the highest of the session, the Parisian index flirted with 6,140 points (+ 1.6%), its best level since September 15, before the American central bank raised its key rates for a third time in a row. by 75 basis points (to bring them within a range of 3-3.25%) and that the new British Prime Minister, with her economic program, does not set fire to the powder keg, risking to blow up the financial planet, less three weeks after taking office.
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To restore calm to the debt market, shaken by panic sales of British bonds (gilts) by pension funds obliged to bring (because of the runaway on the rate caused by the “Trussonomics”) to their counterparties (often banks) more and more collateral to cover their exposure to leveraged derivatives, the Bank of England (BoE) had to intervene urgently on September 28 to avoid a “credit crunch “. For just over two weeks, until Friday, she bought gilts in the debt market. The BoE also announced at the end of September that it was postponing the start of the reduction in its balance sheet until October 31.
This morning the FinancialTimes reported, quoting senior BoE officials, that the British central bank had decided to postpone again the “quantitative tightering” which, across the Channel, involves not only non-rollovers of positions but also disposals on the sovereign bond market. Information initially welcomed by the Stock Exchange but denied at the end of the morning by the institution.
The good surprises of the publication season
However, the Cac 40 and other European markets ended up, while the American markets also progressed. On the Dow Jones (+0.6%), Goldman Sachs, which published its accounts for the third quarter, gained more than 3%. Although profit was down year on year, weighed down by investment banking activity, it was still better than expected thanks to trading activity, with Goldman Sachs notably selling “put” options allowing it to protect against a stock market decline.
On the macroeconomic front, industrial production rebounded 0.4% in September in the United States, more than the 0.1% increase anticipated by the market after a contraction of 0.1% in August. On the Old Continent, economic sentiment improved in October across the Rhine, the index drawn up by the ZEW institute coming out at -59.2 points against -61.9 in September and -66.5 anticipated by the market. However, the index remains “at a very low level, while the current conditions index, which is more closely correlated to GDP, has actually declined more than expected [à -72,2, contre -60,5 en septembre et -68,5 estimé]. Along with other surveys, the ZEW clearly points that Germany is now in recession”underlines Franziska Palmas of Capital Economics.
The prospect of a recession in Europe has already been recognized by the stock market. The Stoxx European index of the 600 biggest companies of the Old Continent is still losing 20% compared to its record at the beginning of January. In this context, and as the publication season has begun, good surprises are welcomed with enthusiasm.
Publicis ends with a gain of more than 2% after rising 4.7% at the best of the session. The advertising group has once again raised all of its financial objectives for 2022, encouraged by continued strong and better-than-expected growth in its activities in the third quarter, particularly in North America and Europe.
Conversely, Eurofins Scientific lost 2.7% after the publication of its accounts.