The Paris Stock Exchange is up sharply, the recent fall in the markets causing a wave of cheap purchases, especially as the easing observed in interest rates is reviving appetite for risky assets. Investors are also betting that the latest series of poor macroeconomic indicators will encourage central banks to be less aggressive on the monetary level.
Shortly after 4 p.m., the Bedroom 40 increased by 3.25% to 6,074.80 points in a business volume, however limited, of 1.7 billion euros. A rise, which if confirmed at the close, will allow the index to sign its first weekly increase in four weeks. In New York, the Dow Jones gains 1.96% and the Nasdaq Composite 2.61%.
Degraded indicators
US consumer confidence fell more than expected in June, with the final index compiled by the University of Michigan coming out at a record low of 50 points, against 50.2 in the first estimate and 58.4 in May. One-year inflation expectations were revised down slightly to 5.3%, against 5.4% previously estimated. Sales of new homes for their part recorded a surprise rebound of 10.7% in May, after a fall of 12% in April.
In Germany, the business climate deteriorated in June, the index compiled by the Ifo institute contracted by 0.7 points to 92.3, impacted in particular by fears over Russian gas deliveries and the ‘inflation. More broadly, the activity indices in the private sector show a sharp slowdown in growth in Europe and the United States, where companies saw their orders fall for the first time in two years.
From inflation to recession
Recession fears have increased in recent days, a word also spoken to Congress by Jerome Powell, who does not rule out such a possibility. The Chairman of the Fed repeated Thursday before the House of Representatives “ unconditional commitment of the central bank to fight against inflation. But, on the market, it is the fear of a recession that predominates, which will force the Federal Reserve to lower its tone sooner or later, according to analysts.
” Assuming that the Fed will have to change course before the end of 2023 is not unreasonable, underlines Jeffrey Halley, analyst at Oanda. According to him, the Fed and a host of central banks around the world have got inflation completely wrong and are scrambling to correct their mistake. Given their record in this area, to assume that they will make the opposite mistake is perfectly reasonable in this context. “. The fear of a recession has also weighed on the prices of raw materials and lowered the yield of government bonds. ” Which certainly helped equity markets says Roger Jones of London & Capital.
Sanofi boosted by its vaccine candidate
Fourth capitalization of the Cac 40, Sanofi increased by 4.2%. The French group and its British partner GlaxoSmithKline (GSK) have announced that their candidate vaccine against Covid-19 containing the Beta antigen has demonstrated its efficacy and a favorable safety profile, in particular against the Omicron variant of the coronavirus.
Technology stocks are progressing in the wake of the Nasdaq. Dassault Systems rises by 4.6%, Capgemini by 3% and Teleperformance by 4.5%. Societe Generale reiterated its buy recommendation, maintaining its price target at 400 euros.
Among the other analyst notes, Societe Generale, again, raised its recommendation on Pernod Ricard from “hold” to “purchase” to aim for 204 euros. Berenberg started monitoring vinci to “purchase” with a target of 105 euros. Deutsche Bank went from “sell” to “hold” on Air France-KLM and target 1.50 euro.
Banks and luxury stocks are also sought after, like LVMH (+3.8%) or Agricultural credit (+3.6%).
The automotive sector continues to decline, as Renault (-1.1%) Where Valeo (-2.5%).