The Paris Stock Exchange begins August with a limited gain after its solid performance in July, while Wall Street is hesitant as a less aggressive attitude from the Fed seems less likely. The better-than-expected results of the HSBC bank and the departure of a first shipment of Ukrainian cereals from the port of Odessa make it possible to limit the impact of the deterioration in manufacturing activity in China, the euro zone and the States -United.
Across the Atlantic, the manufacturing activity index established by the Institute for Supply Management (ISM) fell by 0.8 points to 52.2, its lowest level since April 2020, while remaining above the threshold criticism of 50 points. The equivalent PMI calculated by S&P Global for the euro zone fell to 49.8 points in final data for July, thus signing its first drop below the 50 point mark, synonymous with a contraction in activity, since June 2020.
Shortly after 4 p.m., the Bedroom 40 gained 0.36% to 6,4714.44 points in a business volume of 1.32 billion euros. Elsewhere in Europe, the Dax of the Frankfurt Stock Exchange takes 0.40% and the FTSE Eb Milanese 0.84%. In New York, the Dow Jones and the Nasdaq Composite nibble respectively 0.13% and 0.38%. “Tech” heavyweights like Apple is stable Microsoftt yields around 1%, while Boeing increased by 4.4%. The US Federal Aviation Authority has approved the aircraft manufacturer’s inspection and modification plan, which should allow it to resume deliveries of 787 Dreamliners, reports Bloomberg and Reuters.
Rising risks of recession
The deterioration in activity in Europe, which reflects the increased risk of recession, is however accompanied by an easing of tensions on supply chains and “ a sharp easing of inflationary pressures in the manufacturing sector “, but not in the energy sector, underlines Chris Williamson, chief economist at S&P Global. He also notes that gas shortages will further hamper activity levels, “ whose contraction is likely to accelerate “. Conversely, the unemployment rate remained stable at 6.6% in June in the euro zone, its lowest level ever.
Global financial markets posted their best monthly performance since 2020 in July, thanks to generally favorable corporate publications and the feeling that the US Federal Reserve could reduce the extent of its next monetary tightening.
The Fed less dovish than it seems
This optimism about a shift in the US central bank’s monetary policy is considered excessive by economists, to say the least, especially since Neel Kashkari, the president of the Minneapolis Fed, reaffirmed on Sunday that the main objective of the Federal Reserve is to bring inflation back towards 2%, while his colleague from the Atlanta Fed, Raphael Bostic, declared shortly before that much remains to be done in terms of monetary tightening.
BNY Mellon also recommends not betting too much on a more “dovish” shift by the Fed in terms of interest rates. ” We believe that the press conference [de Jerome Powell] actually contained some elements ‘hawkish’, including 78 different allusions to inflation in the 26-page transcript. It seems clear to us that the Fed is nowhere near concluding that inflation is back under control, and that further hikes will be needed, even at the cost of a mild recession and/or a weakening of the labor market writes John Velis, US Forex and Macro Strategist at BNY Mellon.
On the bond market, the yield on the 10-year US bond was almost stable at 2.6316%, while that of the Italian BTP of the same maturity fell 13 basis points to 2.92%, thus signing its first falling below the 3% threshold since May in the hope that the government resulting from the legislative elections at the end of September will maintain the country’s economic orientations.
Air France-KLM in sight, the banks rescind their advance
The week will be driven by the monetary decisions of the Bank of Australia and the Bank of England, by the OPEC meeting, which should decide on the evolution of its production in September, as well as by the report on the July employment in the United States.
Company publications will also continue with around 170 S&P 500 companies, starting with Activision Blizzard, after the close of Wall Street tonight, Capterpillar, AMD, Starbucks and Uber, not to mention Europeans BP, Merck, BMW, Infineon, Bayer, Beiersdorf, Lufthansa and the Asians Alibaba and Nintendo. In France, five components of the Cac 40 will unveil their quarterly reports; Bouygues, Axa, Société Générale, Veolia Environnement and Crédit Agricole.
Air France-KLM rose 5.9%, boosted by a rating from HSBC, which went from “hold” to “buy” on the title of the air carrier.
Rising for most of the session, banks pared their gains. BNP Paribas takes 1%, Agricultural credit 0.1% and Societe Generale 0.2%. HSBC published better-than-expected quarterly results, driven by rising interest rates and pledged to resume, as soon as possible, to resume the payment of a dividend to bring it back to the level before the health crisis . The bank has also raised its profitability forecasts by counting on growth in its income. In London, HSBC advances by 6.8%.
The automotive sector continues to rebound, still driven by the good quarterly performance of Renault and Stellantis, despite the announcement of a 7.1% drop in new car registrations in France last month. Renault garners 4%, Stellantis 2% and Faurecia 1.8%.
Bollore gains 2.9%. The group published sharply higher results for the first half, supported in particular by the good performance of its transport and logistics activities.
vinci yields 1%. Grupo Aeroportuario del Centro Norte (OMA), announced that it had received a letter from the investment fund Fintech Advisory regarding the indirect sale of 29.9% of the capital of the Mexican airport group to a subsidiary of Vinci Airports for a total amount of 815, 4 million dollars (797.3 million euros).