The Paris Stock Exchange is stepping up its progression, thus returning to levels not seen since the middle of last week, in a market which remains marked by high volatility. Investors are betting that the recent series of poor macroeconomic indicators will encourage central banks to be less monetary aggressive.
Around 2:30 p.m., the Bedroom 40 increased by 1.96% to 5,998.77 points in a business volume of 1.2 billion euros. If the trend is confirmed at the close, the index will be able to sign its first weekly increase in four weeks. The contracts future on American indices gained between 0.7% for the Dow Jones and 0.8% for the Nasdaq 100.
In Germany, the business climate deteriorated in June, the index established by the Ifo institute contracted by 0.7 points to 92.3, weakened in particular by fears over Russian gas deliveries and the ‘inflation. More broadly, the activity indices in the private sector show a sharp slowdown in growth in Europe and the United States, where companies saw their orders fall for the first time in two years.
From inflation to recession
Recession fears have increased in recent days, a word also spoken to Congress by Jerome Powell, who does not rule out such a possibility. The Chairman of the Fed repeated Thursday before the House of Representatives “ unconditional commitment of the central bank to fight against inflation. But, on the market, it is the fear of a recession that predominates, which will force the Federal Reserve to lower its tone sooner or later, according to analysts.
” Assuming that the Fed will have to change course before the end of 2023 is not unreasonable, underlines Jeffrey Halley, analyst at Oanda. According to him, the Fed and a host of central banks around the world have got inflation totally wrong and are scrambling to correct their mistake. Given their record in this area, to assume that they will make the opposite mistake is perfectly reasonable in this context. “. The fear of a recession has also weighed on the prices of raw materials and lowered the yield of government bonds. ” Which certainly helped equity markets says Roger Jones of London & Capital.
Two US indicators are scheduled for 4 p.m.: last month’s new home sales and the University of Michigan’s final June consumer confidence index. Attention will be focused on the one-year inflation expectations component, which had reached a record 5.4% in the first estimate, which did not escape Jerome Powell.
The analysts at work
Technology stocks are progressing in the wake of the Nasdaq. Dassault Systems rises by 3.1%, Capgemini by 1.5% and Teleperformance by 3.5%. Societe Generale reiterated its buy recommendation, maintaining its price target at 400 euros.
Among the other analysts’ notes, Societe Generale, again, raised its recommendation on Pernod Ricard from “hold” to “purchase” to aim for 204 euros. Berenberg started monitoring vinci to “purchase” with a target of 105 euros. Deutsche Bank went from “sell” to “hold” on Air France-KLM and target 1.50 euro.
Sanofi gains 3.4%. The French group and its British partner GlaxoSmithKline (GSK) have announced that their candidate vaccine against Covid-19 containing the Beta antigen has demonstrated its efficacy and a favorable safety profile, in particular against the Omicron variant of the coronavirus.
Banks and luxury stocks are also sought after, like LVMH (+2.3%) or Agricultural credit (+2.7%).
The automotive sector continues to decline, as Renault (-1.5%) Where Valeo (-4.2%).