The Paris Stock Exchange fell in this first session of the month of May, traditionally bearish. Inflation is soaring and Chinese growth is being hampered by health restrictions in several major cities across the country. Beyond the continuation of the quarterly earnings season, the next few days will be punctuated by the monetary decisions of the American Federal Reserve and the Bank of England, as well as the April employment report in the United States. United.
At 9:45 a.m., the Bedroom 40 lost 1.24% to 6,452.90 points in a business volume of 280 million euros.
Asian markets ended lower this morning, weighed down by the continued deterioration in manufacturing activity in China in April. The official PMI index fell 2.1 points to 47.4, thus emerging below the critical threshold of 50 points, which separates expansion and contraction, for the second consecutive month. The Caixin manufacturing PMI also continued to contract to 46 points from 48.1 in March. The session will also be animated by the final S&P Global and ISM activity indices in Europe and the United States in April.
An eye on Fed rates and balance sheet
If the number of contaminations shows signs of slowing down in China, the city of Beijing will keep its gymnasiums and theaters closed during the three holidays of Labor Day celebrations during which the markets will remain closed from this Monday. Financial centers will also remain closed in Hong Kong and London today.
On Friday, Wall Street ended sharply lower after its worst week since the end of January, capping one of its worst months since the emergence of the pandemic in 2020. The fall in stocks and the rise in bond yields tighten financial conditions two days before the Fed’s monetary decision, which should result in a 50 basis point increase in federal funds, the highest level since 2000. The Federal Reserve could also announce its intentions in terms of reducing of the amount of its balance sheet. The more aggressive tone adopted by several central bank officials suggests other major gestures to stem the inflationary spiral. According to CME Group’s FedWatch tool, the market expects the Fed Funds rate to return to 3% or even above by the end of the year.
The European Central Bank could also raise its tone. Vice-President Luis de Guindos has indeed indicated that the ECB could decide to interrupt asset purchases in July, prior to a future rate hike. This will depend on the central bank’s new economic projections, which will be released in June.
Tech and luxury under pressure
Beyond a higher cost of credit, the tightening of monetary policies raises the specter of recession, especially as price pressures are fueled by the surge in raw materials linked to the war in Ukraine. Some fear that the situation could get worse as the European Union is expected to try to agree this week on the introduction of progressive restrictions on Russian oil imports, which could lead to an outright embargo towards the end of the year. year, reports Bloomberg, citing sources familiar with the discussions.
Automakers are falling in the wake of the 22.6% drop in new car registrations in France last month. Renault and Stellantis yield between 1.4% and 2%. same for me Faurecia and Valeo down almost 2%
The technologies STMicroelectronics (-2.3%) and Worldline (-1%) in the wake of the Nasdaq’s decline of more than 4% on Friday.
Among other growth stocks, Kering loses 2.3%, Hermes 2.4% and LVMH 1.3%.
Casino plaice by 2.3%. Citi lowered its target price on the title of the distributor from 27 to 17 euros.
Conversely, Crossroads increased by 1.7%. The Canadian Alimentation Couche Tard and the British EG Group are discussing a merger of some of their assets, including BP gas stations, and some convenience stores, reports Dow Jones, citing sources familiar with the matter.
Airbus lost 0.7% despite the announcement by Qantas Airways of a contract with the European aircraft manufacturer for 12 A350-1000s capable of performing non-stop flights between Sydney and London as well as 40 other aircraft in order to renew its fleet.