The stock market is down for the fifth session in a row, the initial decline on Wall Street having been right for the attempted jump at the start of the afternoon. The market remains exposed to inflation fears, monetary policy tightening and the prospect of a recession as quarterly earnings season approaches.
The International Monetary Fund has revised down its growth forecast for the global economy to 2.7% next year, from 2.9% in July, due to the impact of rising rates on the economy. America, soaring gas prices in Europe and health restrictions in China. The IMF nevertheless maintains its forecast at 3.2% for 2022, with better-than-expected growth in Europe making it possible to offset the American slowdown. But this figure reflects a sharp slowdown after the 6% rebound in the global economy last year.
Around 4 p.m., the Bedroom 40 lost 0.73% to 5,797.72 points after a low point at 5,770.48 (-1.19%) and a peak at 5,849.58 (+0.15%). The volume of business remains limited with 1.2 billion euros traded on the values of the index. In New York, the Dow Jones bent by 0.21% and the Nasdaq Composite by 1.11%.
Volatility remains high on the eve of the publication of the “minutes” of the last meeting of the Fed’s monetary policy committee and two days before that of the consumer price statistics in the United States.
A figure above the 8.3% recorded in August could shock markets and Thursday could well be “ a new day at -5% warn the members of the JPMorgan trading desk, recalling that the S&P 500 fell 4.3% on September 13, the day of the publication of the inflation figures in August. However, this is the most pessimistic scenario, insofar as the bank’s economists expect inflation to slow to 8.1% over one year in September.
Fixing Fed Mistakes
Fed officials have so far shown no signs of a pause in the rate hike cycle despite the risks to the US economy. Vice President Lael Brainard, however, was cautious, pointing out that recent rate hikes continue to work their way through the economy, while the Chicago Fed’s Charles Evans said he was in a hurry to get to the point where monetary officials will be inclined to pause in order to avoid the risk of going too far. ” Given the scale of the tightening to try to undo past mistakes, the Federal Reserve is ill-equipped to complete the process and bring the economy back to a soft landing Says Komal Sri-Kumar, president of Sri-Kumar Global Strategies, in a note quoted by Bloomberg.
Tensions on the British bond market eased somewhat after the announcement by the Bank of England (BoE) of the extension of its bond purchase program to inflation-indexed securities. The BoE warned of dysfunctions that threaten financial stability. The yield on the 10-year gilt eased 3 basis points to 4.44% after rising more than 50 basis points since October 4. That of the American loan of the same maturity is maintained in view of the threshold of 4% at 3.9265% (+4 basis points).
Investors are also pondering the words of Jamie Dimon. The boss of JPMorgan indeed considers a recession likely within six to nine months in the United States, as well as an additional drop of 20% of the S&P 500, depending on whether the Fed will manage, or not, to organize a soft landing of the American economy. JPMorgan is among the banks that will release their quarterly results on Friday.
Towards a recession by summer in the United States?
Fears about the economy weigh on banking stocks, BNP Paribas, Agricultural credit and Societe Generale yield between 1.2% and 2.7%. For its part, the technological compartment continues to suffer from new American control measures on semiconductor exports to China, including for foreign manufacturers using American technologies. STMicroelectronics down 2.4%.
At European level, the basic resources sector remains weighed down by the resumption of Covid-19 contaminations in China, while that of oil and gas is weakened by the decline in the barrel of Brent, the economic slowdown taking precedence over the reduction of OPEC+ production. In Paris, TotalEnergies loses 2.1%.
Sanofi pulls out of the game, Renault falls
ArcelorMittal loses 1.7% and Capgemini 2.2% after being removed from the “Focus Europe” list of Jefferies’ favorite European stocks.
Conversely, Nexity appreciated by 0.8% following a note from Barclays, which began to cover the title to “overweight”.
Renault gives up 3.6%. Its partner Nissan has announced the sale to the Russian public group NAMI of its assets in the country, an operation which will result in an exceptional loss of around 100 billion yen (707 million euros). Nissan will retain a buyout option for six years.
Sanofi takes 0.8%. The pharmaceutical group has announced last-minute positive results for a phase 3 trial involving the experimental use of its drug Dupixent (dupilumab) in children aged 1 to 11 suffering from eosinophilic esophagitis.
defensive value, Crossroads grew by 2%, in the wake of the entire distribution sector in Europe.