The Paris Stock Exchange is moving to more than two-week lows, weighed down by the conjunction of fears that an aggressive tightening of monetary policy by the Fed will slow growth and that the war in Ukraine will exacerbate inflationary tensions by through Western sanctions. Today’s macroeconomic indicators end up clouding the picture with the 2.2% drop in German industrial orders in February, the first in four months, and the 31.4% surge in prices over one year. to production in the euro zone.
Around 2:30 p.m., the Bedroom 40 fell by 2.07% to 6,507.92 points in a business volume of 1.6 billion euros. In Frankfurt, the Dax loose 1.94% Contracts future on American indices yielded between 0.7% for the Dow Jones and 1.6% for Nasdaq 100.
On the bond market, the yield on the French 10-year OAT crossed the 1.2% threshold for the first time since 2015, peaking at 1.2220%, before returning to around 1.1990%. The yield spread with the German Bund of the same maturity is at its highest since March 2020 at around 53.5 basis points, which is weighing on banks. BNP Paribas, Agricultural credit and Societe Generale lose between 3.2% and 4%. Technology stocks are also affected, STMicroelectronics and Worldline yielding more than 3%. In addition, Jefferies went from “buy” to “hold” on TotalEnergies (-1.5%) citing the war in Russia and political risk in France ahead of the first quarter results.
“ Towards a more neutral position of the Fed »
In the United States, the yield on the 10-year bond reached a 3-year peak at 2.65%, against 2.4% on Monday evening. Fed Governor Lael Brainard said on Tuesday that the “ most important task is the fight against inflation, adding that the central bank will also have to tackle the rapid reduction in the size of its balance sheet from May, in order to bring its policy towards ” a more neutral stance ” at the end of the year.
She also came out in favor of raising the federal funds rate by half a point next month. ” These comments are all the more significant since Ms. Brainard is typically one of the most ‘dovish’ of the FOMCnotes Jeffrey Halley, market analyst at Oanda. If it went over to the super-hawks, the market will have to take that into account, and it did.. QE’s honeypot [assouplissement quantitatif] is about to be closed “, he adds. Investors fear that a more restrictive policy could lead to a slowdown in the American economy, or even a recession. Scheduled for 8 p.m., the publication of the “minutes” of the last FOMC meeting will be even more closely followed.
Washington is expected to present new measures on Wednesday prohibiting any new investment in Russia. Banks, state enterprises and certain members of the government would also be targeted, as well as two daughters of Vladimir Putin, according to the press and American agencies. The European Union has already announced that it plans to stop coal imports and close its ports to Russian ships, without attacking oil or gas. Leading business leaders and Russian oligarchs would also be targeted according to the FinancialTimeswhich cites a draft EU document.
Klépierre downgraded by JPMorgan, Carrefour surrounded
LVMH, Kering and Hermes lost 2%, 3.8% and 1.9% respectively in reaction to the contraction of activity in the services sector in China last month. The resumption of the coronavirus epidemic has reduced mobility and weighed on demand as the confinement of the 25 million inhabitants of the city of Shanghai has been extended.
Klepierre down 4.7%. JPMorgan downgraded the stock from “neutral” to “underweight” due to the threat that inflation and the cost of debt pose to its prospects for profit growth.
Heavily exposed to Russia, Renault give up 5%. Stellantis plaice for its part 5.2% and Faurecia of 5.1%, thus registering a one-year low.
Conversely, crossroads increased by 1.9%. Kepler Cheuvreux raised its price target from 21.21 to 23 euros ahead of its quarterly results, citing performance “ solid in Brazil and France. Barclays also improved its target price to 22 euros, against 20.50 previously.