The Paris Stock Exchange shows its fifth consecutive decline on Wednesday, in a market plagued by high volatility. Tensions on bond yields and the prospect of recession against a backdrop of tighter monetary policies raise fears of a deterioration in corporate performance ahead of the third quarter results.
Around 11 a.m., the Bedroom 40 yields 0.74% to 5,797.38 points after a low point at 5,777.66 (-1.07%) shortly after the opening. The volume of business remains limited with barely 500 million euros traded on the values of the index.
The Bank of England announced this morning the extension of its emergency bond purchase program to inflation-linked securities and warned of ” significant risks related to the dysfunctions caused by the massive sales by pension funds which threaten British financial stability.
Banks and techs under pressure
Fears about the economy weigh on banking stocks, while the technology compartment continues to suffer from new American measures to control exports of semiconductors to China, including for foreign manufacturers using American technologies. BNP Paribas, Agricultural credit and Societe Generale yield between 1% and 2%. STMicroelectronics down for its part by 1.4% in the wake of the 3.5% decline in the Philadelphia semiconductor index on Monday evening. At the European level, with the exception of distribution (+0.5%), all the Stoxx 600 sector indices are in the red, starting with basic resources (-2.8%) and oil & gas ( -2.5%). In Paris, TotalEnergies down 2.4%.
The yield on the US 30-year bond hit a nearly 9-year high of 3.952%, up 11 basis points, as the bond market recovered from the Columbus Day pause. Investors continue to analyze the speeches of Fed officials looking for the slightest sign of a change in tone in their “hawkish” approach.
VP Lael Brainard sounded cautious, noting 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.
Dimon sees a recession in the United States by summer
Three days before the publication of the consumer price index, the market assesses the probability of a fourth consecutive increase of 75 basis points in Fed rates at 78.8%. Expected Thursday, US inflation figures for September could shed new light.
JPMorgan boss Jamie Dimon anticipates a recession within six to nine months in the United States, believing that the rebound observed after the health crisis will eventually come up against the Fed’s efforts to control inflation, especially since the war in Ukraine adds to the uncertainties. Speaking on CNBC, he added that he anticipates a further 20% drop in the S&P 500. JPMorgan is among the banks that will release their quarterly results on Friday.
The International Monetary Fund’s global economic forecast is the main event of the day, as the IMF and World Bank warned of signs of recession as economies in developed countries slow and inflation surges. central banks raised rates, adding to pressure on developing country debt.
Sanofi pulls out of the game
ArcelorMittal loses 2.1% and Capgemini 2.2% after being removed from the “Focus Europe” list of Jefferies’ favorite European stocks.
Conversely, Nexity appreciated by 1.2% following a note from Barclays, which began to cover the title to “overweight”.
Sanofi takes 0.9%. 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.