The Paris Stock Exchange is moving around its closing levels on Friday in the early morning as Wall Street and Asian markets remain buffeted by the deterioration of the economic environment and the tightening of monetary policy by the major central banks.
Asian markets retreated as the close approached this morning. The Chinese Communist Party Congress, which began on Sunday, is preparing to renew Xi Jinping for a third term as head of the country. The latter insisted in his opening speech that the policy of zero Covid would be maintained and warned that he did not rule out using force to assert Beijing’s sovereignty over Taiwan.
On Wall Street, the S&P 500 fell 3.1% on Friday and is now down 25% from its January peak. Soaring inflation in the United States supports expectations of aggressive Fed action and market participants fully priced in a 75 basis point rate hike at the November meeting.
Towards two hikes of 75 basis points?
St. Louis chapter president James Bullard said he was open to 3-quarter percentage point hikes in the Fed funds rate in November and December. Mary Daly, her colleague from San Francisco, is ” very favorable to a push in rates in the restrictive zone, and a level of 4.5% to 5% is, according to her, “ the most likely prospect “. On Friday, the yield on the US 10-year bond finished above 4% for the first time since 2008.
Closer to home, Klaas Knot, a member of the European Central Bank’s executive board, said on Sunday that the ECB will have to consider shrinking its balance sheet once it reaches the “neutral rate”, which neither stimulates nor dampens economic growth. economy.
Bank of America enters the race ahead of Goldman Sachs
Across the Channel, the Bank of England ended its emergency long-term bond purchase program on Friday. The ousting of Kwasi Kwarteng from his post as Chancellor of the Exchequer and his replacement by Jeremy Hunt has somewhat eased fears about Britain’s financial stability. On the foreign exchange market, the pound rose 0.5% to 1.1269 dollars in response to Jeremy Hunt’s announcement of the advancement to Monday of the presentation of the outline of his draft budget. But the political future of Prime Minister Liz Truss seems to be in jeopardy, with the press echoing the desire of Conservative MPs to replace her.
The coming week will be loaded with corporate publications for the third quarter. Nine components of the Cac 40 will comply with the exercise, namely Eurofins Scientific, Publicis, Hermès, Kering, L’Oréal, Pernod Ricard, Vivendi, EssilorLuxottica and Renault.
In the United States, Bank of America will unveil its quarterly accounts on Monday before the opening of Wall Street. Other heavyweights like Goldman Sachs, Tesla, Netflix, American Express and Johnson & Johnson will follow in the coming days.
The only major macroeconomic indicator, the New York Fed’s Empire Manufacturing Index, will be released at 2:30 p.m.