The Paris Stock Exchange is up slightly and Wall Street should follow at the start of this week which promises to be the busiest of the season in terms of companies. Investors are limiting initiatives, especially since the US Federal Reserve will begin a two-day meeting of its monetary policy committee on Tuesday. Weak trading volumes, with barely 850 million euros traded on the Cac 40, heightened market volatility, with the flagship index oscillating within a margin of nearly 100 points between a decline of 0.63% and a gain of 0.69%. In the United States as in Europe, the latest PMI indicators reflect a contraction in activity, and Germany seems particularly affected.
Around 2:30 p.m., the Bedroom 40 gained 0.68% to 6,259.03 points after a peak at 6,260.13, unprecedented since June 10. Elsewhere in Europe, the Dax of the Frankfurt Stock Exchange takes 0.43% and the FTSE Eb Milanese 0.68%. The contracts future on indices Dow Jones and Nasdaq 100 rose 0.5% and 0.4% respectively as Wall Street fell at the close on Friday, as disappointing quarterly results from social network Snap weighed on tech stocks on fears of a drop in advertising revenue in line.
The business climate deteriorated in July across the Rhine, the index calculated by the Ifo institute having fallen by 3.6 points to 88.6, its lowest level since June 2020, weighed down by the rise in prices of energy and the fear of a gas shortage. For Jessica Hinds, Senior Economist Europe at Capital Economics, “ the message sent by the German institute Ifo is clear: the outlook is deteriorating, and rapidly. High inflation is already squeezing consumer demand and gas restrictions are looming. Germany appears to be heading for a deeper recession than most other countries in the coming months “.
” An incredibly changeable feeling »
At the European level, the banks’ Stoxx 600 posted the best sector performance with a gain of 1.8%, while the profits of institutions in the euro zone should benefit from the tightening of the ECB’s monetary policy. In Paris, BNP Paribas, Agricultural credit and Societe Generale earn around 2%. Conversely, the index associated with property values fell by 0.6%.
Market sentiment has oscillated in recent weeks between fears that the economic slowdown will hurt business performance and hopes that lower demand will eventually dampen inflation, leading central banks to return to monetary policies. less restrictive. The economy is showing signs of weakening in all sectors. and demand is deteriorating due to inflationary pressuressummarizes Neil Birrell, of Premier Mitton Investors. But bad news can be seen as good news in macro-centric markets and the sentiment has become incredibly changeable. “, he adds.
Slowdown or recession in the United States?
In the United States, the prospect of a 100 basis point hike in the Fed funds rate has receded after two of the most “hawkish” members of the FOMC, in this case Governor Christopher Waller and President of the St. Louis Fed James Bullard, indicated that they would support a hike of 75 basis points, as in June. The central bank has chosen to give priority to the fight against inflation at the risk of a slowdown in the economy, while the rise in consumer prices reached 9.1% over one year in June. As for the ECB, Martin Kazaks, a member of the board of governors, told Bloomberg that the central bank may not be done with steep rate hikes after raising them by 50 basis points.
Second-quarter US GDP figures will be released on Thursday. According to the Atlanta Fed’s GDP Now tracker, which traces expectations based on economic indicators, the market is expecting a contraction of 1.6% in the American economy, after a drop of the same magnitude in the first quarter, which would meet the definition of a recession with two consecutive quarters of contraction. However, the consensus anticipates a growth of 0.3% of the American GDP. On the Old Continent, Eurostat will unveil on Friday the first estimates of July inflation and second quarter GDP in the euro zone.
Faurecia and Plastic Omnium confirm, Eutelsat dives
On the corporate front, 175 S&P 500 companies, more than a third of the total, are due to report second-quarter results this week. Among this flood of publications, the five Gafam will occupy a place of choice with in particular the first two capitalizations of Wall Street, namely Microsoft, tomorrow, and Apple, Thursday. The strength of the dollar, at its highest level in 20 years against the main currencies, risks weighing on the performance of international companies. In France, 30 components of the Cac 40 will be in the running, including the main capitalizations of the Paris market such as LVMH, Hermès, TotalEnergies, Sanofi, L’Oréal or even Airbus.
Faurecia increased by 8.5%. Forvia, the automotive supplier born from the merger between the French group and the German Hella, confirmed its annual outlook while its half-year results suffered from the inflationary environment.
Its competitor Plastic Omnium ahead 3% after also confirming its guidance for fiscal year 2022, as its results beat analysts’ forecasts in the first half. In the same sector, Renault appreciated by 3.2%.
Eutelsat fall of nearly 17%. The satellite operator has confirmed that it has entered into discussions with its co-shareholders in OneWeb, with a view to a possible merger of the two companies by exchange of shares. Eutelsat already holds 23% of the capital of the British company, which is developing a high-speed Internet access service covering regions not served by terrestrial connections.
Orange wins 1.7%. The French operator and Masmovil have announced that they have signed an agreement to combine their activities in Spain, the result of exclusive negotiations started in this direction in early March 2022.
Down this morning, TotalEnergies is now gaining 0.6% in the wake of the upturn in oil prices, which have nevertheless dropped nearly 10% since the start of the month.
ADP loses 2%. RBC Capital downgraded the title of the airport operator from “outperforming” to “underperforming”.