The Paris Stock Exchange settles in the red and Wall Street should do the same. The quarterly results of US banks are proving disappointing, while the surge in prices reinforces expectations of major monetary tightening by central banks. Producer prices indeed increased by 1.1% over one month in June and by 11.3% over one year, against respectively +0.8% and +10.7% expected. An increase which comes the day after the announcement of a jump to 9.1% over one year in consumer prices.
JPMorgan Chase lost 3.6% ahead of the New York market after announcing the temporary suspension of its share purchases to strengthen its capital in the face of the deterioration of the economic environment. The bank reported earnings per share of $2.76, against 2.88 expected. Morgan Stanley (-1.1%) was affected by the deterioration in the activity of its investment banking division. Its net profit per share was $1.39, 14 cents below the consensus.
The EC lowers its growth forecasts
Around 2:45 p.m., the Bedroom 40 fell 1.55% to 5,907.23 points in a listless business volume on this national holiday with 580 million euros traded. The contracts future on American indices yield between 0.9% and 1.5%.
The European Commission lowered its growth forecast for the euro zone to 2.6% this year and 1.4% in 2023, from 2.7% and 2.3% respectively estimated in June. Inflation is expected to reach 7.6% in 2022, against 6.1% initially forecast.
The yield on the 2-year US bond, the most sensitive to changes in Fed rates, remains above the 10-year maturity, at 3.2276%, against 2.9688% for the second. This yield curve inversion dynamic, which generally heralds a recession, is the most marked since 2000.
Brent lowest since March
According to CME Group’s Fedwatch tool, the market is pricing an 85.7% chance of a 100 basis point hike in the Fed funds rate on July 27, following a 75 basis point hike in June. Jerome Powell recently insisted on the Fed’s “unconditional” determination to fight inflation, even at the risk of a recession.
In this context, banks are generally down in Europe. In Paris, BNP Paribas, Agricultural credit and Societe Generale lose between 2.6% and 3.4%.
Expectations of monetary tightening by the Fed are also weighing on oil prices due to fears of reduced demand in the face of the risk of recession. Brent crude from the North Sea sinks below $100 after hitting 96.95, its lowest since March. Prices have fallen more than 20% since the June highs. TotalEnergies down 4%.
On the foreign exchange market, the euro is quoted at 1.0048 dollars, after briefly falling below parity yesterday at 0.9988 dollars.
UBS downgrades the chemicals sector
Arkema down 4.3%. UBS has downgraded the entire European chemicals sector in this period ” brittle because of the risks of energy rationing and deterioration of consumer confidence. The broker went from “neutral” to “sell” on the title.
Atos plaice of 4%. S&P Global Ratings on Wednesday lowered the SSII’s credit rating from “BBB-” to “BB”, bringing it back to the junk bond category. This downgrade comes with a negative outlook, following the group’s plan to split its business into two separate legal entities.