The “sell-off” is reasserting itself on the financial markets, the flagship index of the Paris Stock Exchange having erased its “bear market rally” of the last two days from the opening. The move is fueled by falling commodity-related stocks as the 9.1% year-on-year surge in UK consumer prices in May reignited fears of a slowing global economy in an environment of monetary policy tightening by the major central banks. It is in this context that investors await Jerome Powell’s speech before Congress.
Around 2:30 p.m., the Bedroom 40 down 1.75% to 5,860.56 points in a volume of 1.25 billion euros. At European level, the 19 Stoxx 600 sector indices are in the red, starting with those of basic resources and oil and gas, which fell by 4.1% and 2.8% respectively. The contracts future on American indices lost between 1.3% for the Dow Jones and 1.6% for the Nasdaq 100 the day after a rise of more than 2% on Wall Street. According to data compiled by Bloomberg, with a 21% fall since the start of the year, the S&P 500 is on course to complete its worst first half since 1970, under the chairmanship of Richard Nixon.
How far does Powell plan to raise rates?
The fall of more than 4% in the barrel of Brent from the North Sea, to 109.30 dollars, illustrates fears of a sharp slowdown in the world economy, especially as Joe Biden has called on Congress to suspend federal taxes on petrol and diesel for three months. He is also preparing to urge the country’s 50 states to temporarily suspend their own taxes on petroleum products. In ParisCGG, Vallourec and TotalEnergies drop 6.5%, 5.4% and 2.6% respectively.
Jerome Powell must address, from 3:30 p.m., the Senate Banking Committee as part of the first part of his semi-annual monetary policy speech to Congress. For Michael Hewson of CMC Markets, parliamentarians should seek to know ” how far the central bank is willing to go to control inflation (…), whether he agrees with his colleague Christopher Waller that the Fed’s only priority right now is to fight inflation, and whether the Fed is willing to let unemployment rise sharply to achieve that goal “. The Federal Reserve last week raised the Fed funds rate by 75 basis points, the first since 1994, to a range of 1.5% to 1.75%.
ArcelorMittal stuck between JPMorgan and Umicore
ArelorMittal fell 8.3% as JPMorgan downgraded the steelmaker’s stock from “overweight” to “neutral”. In addition, the Belgian Umicore fell by 9% in Brussels. The specialist in the recycling of non-ferrous metals has announced an investment plan of 5 billion euros by 2026, ” significantly higher than Jefferies forecast.
Rexel drops 6.2% following an article by Mediapart evoking suspicions of tax evasion in Switzerland and suspicions of illicit price fixing. Schneider-Electric (-3.4%) and Great (-3.5%) are also in turmoil following this article.
Derichebourg loose 7.3%. Oddo BHF lowered its recommendation on the business and environmental services group from “overweight” to “neutral” and reduced its price target from 14.50 to 9.50 euros.
Conversely, Orange gained 0.9% as Barclays went from “underweight” to “online weighting” on the title of the telecom operator.