The Paris Stock Exchange is accentuating its losses in reaction to the sharp deterioration in manufacturing activity in the euro zone, which echoes the contraction observed in China. The PMI index compiled by S&P Global fell to 55.5 points within the Nineteen in April, a 15-month low, while selling prices recorded a record rise.
Around 10:30 a.m., the Bedroom 40 lost 1.76% to 6,418.46 points in a business volume of 850 million euros.
” Eurozone manufacturing activity virtually stagnated in April, with production recording its weakest expansion since June 2020. Companies surveyed not only reported worsening supply tensions, exacerbated by the war in Ukraine and the new health restrictions imposed in China, but also underlined the impact of price increases and growing uncertainty about the economic outlook on the level of demand. Indeed, following a similar trend to production, growth in the overall volume of new orders has markedly stalled since the start of the year.. notes Chris Williamson, chief economist at S&P Global. ” In summary, the manufacturing sector in the euro zone is about to go through a difficult period of falling production and soaring prices. “, he concludes.
In China, the official manufacturing PMI fell 2.1 points to 47.4, thus emerging below the critical threshold of 50 points, which separates expansion and contraction, for the second consecutive month. The Caixin manufacturing PMI also continued to contract to 46 points from 48.1 in March.
Beyond the continuation of the quarterly results season, the next few days will be punctuated by the monetary decisions of the American Federal Reserve and the Bank of England, as well as the April employment report in the United States. United.
An eye on Fed rates and balance sheet
If the number of contaminations shows signs of slowing down in China, the city of Beijing will keep its gymnasiums and theaters closed during the three holidays of Labor Day celebrations during which the markets will remain closed from this Monday. Financial centers are also closed in Hong Kong and London today.
On Friday, Wall Street ended sharply lower after its worst week since late January, capping one of its worst months since the pandemic emerged in 2020. Stocks fell and bond yields rose tighten financial conditions two days before the Fed’s monetary decision, which should result in a 50 basis point increase in federal funds, the highest level since 2000. The Federal Reserve could also announce its intentions in terms of reducing of the amount of its balance sheet. The more aggressive tone adopted by several central bank officials suggests other major gestures to stem the inflationary spiral. According to CME Group’s FedWatch tool, the market expects the Fed Funds rate to return to 3% or even above by the end of the year.
The European Central Bank could also raise its tone. Vice-President Luis de Guindos has indeed indicated that the ECB could decide to interrupt asset purchases in July, prior to a future rate hike. This will depend on the central bank’s new economic projections, which will be released in June.
Tech and luxury under pressure
Beyond a higher cost of credit, the tightening of monetary policies raises the specter of recession, especially as price pressures are fueled by the surge in raw materials linked to the war in Ukraine. Some fear that the situation could get worse as the European Union is expected to try to agree this week on the introduction of progressive restrictions on Russian oil imports, which could lead to an outright embargo towards the end of the year. year, reports Bloomberg, citing sources familiar with the discussions.
Automakers fell in the wake of the 22.6% drop in new car registrations in France last month, as supplies from European manufacturers remained affected by the war in Ukraine. Renault and Stellantis yield almost 3%. same for me Faurecia and Valeo which lose between 3% and 4%.
The technologies STMicroelectronics (-3.8%) and Worldline (-2.3%) in the wake of the Nasdaq’s decline of more than 4% on Friday.
Among other growth stocks, Kering loses 2.3%, Hermes 2.4% and LVMH 1.3%.
Casino bends by 2%. Citi lowered its target price on the title of the distributor from 27 to 17 euros.
Conversely, Crossroads gain 1%. The Canadian Alimentation Couche Tard and the British EG Group are discussing a merger of some of their assets, including BP gas stations, and some convenience stores, reports Dow Jones, citing sources familiar with the matter.