The gains of the summer have more than evaporated! Friday, the day of autumn, the Cac 40 was only a few points from its annual low, hit on March 7 at the start of the Russian offensive on Ukraine. The Parisian index, back below 5,800 points, posted a weekly loss of 4.84%, its worst performance since mid-June. He even found himself in a situation of bear market, down almost 22% since the record high of January 5. The crossing of graphic thresholds may have contributed to the acceleration of the decline on Friday (-2.28%): “There is a high technical density between 5,600 and 5,800 points”, commented on Tuesday, Alexandre Baradez, head of market analysis at IG France.
That said, the major US indices were no more valiant: the Dow Jones contracted 3.86% over five days, and the Nasdaq growth stocks by 5% (at 5 p.m., Friday).
The most awaited event of the week, the Federal Reserve’s Monetary Policy Committee, nevertheless resulted in a further 75 basis point hike in its key rates, in line with the consensus. But the devil was in the statements of its president, Jerome Powell, much more “hawkish” than expected in his commitment to fight against soaring prices. He also raised his inflation expectations and lowered his growth targets for the US economy. What support the fears of a recession on both sides of the Atlantic. They were accentuated on Friday by the activity indices for industry and services in the euro zone, which contracted in September and worsened in Germany.
The risk of recession weighed on oil prices, bringing the barrel of Brent to $85 on Friday and the American WTI below the $80 threshold, for the first time since January. The fall in oil prices was therefore not unrelated either to the acceleration of the decline in the equity markets.