The Paris Stock Exchange reduced its losses without erasing them, the high volatility of the market being accentuated by the low trading volumes with barely 930 million euros traded on Cac 40 stocks. The trend remains weakened by the feeling that central banks will not ease the pressure on interest rates until inflation is under control. And this, at the risk of further weakening the economy and corporate margins as the third quarter results approach. The condition of ” bear market will last until the deterioration in fundamentals is more widely priced in “, warn the strategists of Morgan Stanley.
Around 2:30 p.m., the Bedroom 40 is almost stable at 5,863.37 points (-0.06%). The contracts future on American indices yield between 0.1% and 0.4% on this Christopher Columbus Day, a holiday in the United States, even if Wall Street will be open. The US bond market, on the other hand, will be closed. On Friday, the S&P 500 fell 2.8% and the Nasdaq Composite 3.8%.
The Fed and inflation in the crosshairs
Hopes of the Fed shifting towards a reduction in the scale of its rate hikes were thwarted by the less marked than expected slowdown in job creations in the United States in September, especially as the unemployment rate fell 0.2 points to 3.5%. Several Fed officials also hinted last week that they did not plan to scale back rate hikes until inflation showed some tangible sign of easing.
In the euro zone, the Dutch Klaas Knot, governor of the ECB, said this morning that the European Central Bank will have to make at least two “significant” rate hikes in its next meetings, after the hike of 75 basis points. announced last month. He also said that the ECB must complete the process of normalizing its interest rates before starting discussions on a quantitative tightening program. Eurozone investor sentiment fell in October to its lowest level since May 2020, with the Sentix Institute index falling 7.5 points to -31.3.
US banks to watch
The US central bank will release the “minutes” of the latest FOMC meeting on Wednesday, a day before the consumer price statistic, which is expected to reflect a slight deceleration to 8.1% year on year in September, after 8.3 % in August, however, in “core” data (excluding food and energy), the increase should on the contrary mark an acceleration to 6.5% over one year, against 6.3% in August. The weekend will also be animated by the publication on Friday of the quarterly reports of the major American banks, which traditionally opens the earnings season in the United States.
For the time being, the market assesses the prospect of a 75-point increase in its key rates at the beginning of November at 78%, according to calculations by CME Group on the basis of the evolution. Contracts future on Fed funds. A rise of this magnitude would be the fourth in a row.
Talks between Renault and Nissan
Renault increased by 4.3%. The French group and its Japanese partner Nissan Motor have announced that they are discussing new initiatives aimed at strengthening their alliance. The announcements come as sources have told the wall street journal that Nissan was pressuring Renault to sell part of its stake in the Japanese manufacturer. Nissan could also raise funds in this perspective, according to Reuters.
Defense stocks are sought after as multiple explosions were heard in central Kyiv and other cities across Ukraine this morning in response to the attack that damaged the bridge linking Crimea with Russia at the weekend and that Vladimir blames on Ukraine. Thales takes 0.8% and Dassault Aviation 1.2%.
Growth stocks, and in particular the luxury sector, continue to decline. Kering, Hermes and LVMH lose around 1%. The sector is particularly affected by the sharp rebound in Covid-19 infections in China during the holidays last week.
The techs are also folding in the wake of their Asian counterparts after Washington announced new restrictions on the sale of semiconductors to Chinese companies, including products made abroad with American equipment. STMicroelectronics decrease by 1%.
Casino (-2.6%) hit a new historic low after Standard & Poor’s downgraded its credit rating from B+ to B-. The rating agency has also revised down its profitability estimates for the distribution group.
Finally, vinci gains 2.4%. Jefferies has started monitoring the construction group and “purchase” concessions to target 105 euros.