The attempted rebound did not last on the Paris Stock Exchange, despite the resumption of bargain purchases after three consecutive quarters of decline in the Cac 40. The market now seems to have ruled out the scenario of a less aggressive turnaround by banks interest rate hikes, which had enabled the recent rise in global indices.
Mid-session, the Bedroom 40 lost 0.56% to 5,951.66 points in a limited business volume of 600 million euros. Up this morning, contracts future on American indices are now yielding between 0.6% and 0.7%.
The barrel of Brent from the North Sea fell 0.3% to 93.21 dollars, while maintaining its highest for three weeks after the decision of OPEC + to cut its production by 2 million barrels per day, an unprecedented scale since 2020. The upward pressure on oil prices threatens to prolong the current period of high inflation, especially since black gold is billed in dollars, which increases the bill in the euro zone. TotalEnergies lost 1.3%, in the wake of Shell (-5% in London), which warned that the third quarter performance of its gas activities and its refining margins would be lower than those of the second.
Wednesday’s publication of the ISM services activity index in the United States dashed hopes of an inflection by the Fed, with the employment component reflecting a rebound in hiring to a six-month high in the sector. Previously, the ADP survey on job creations in the private sector (+208,000 against 200,000 expected) had given a similar indication, supported by the upward revision of the previous month’s balance. In this context, the markets will monitor this afternoon the evolution of weekly jobless claims, before focusing tomorrow on the official report of the Department of Labor on job creations in September.
Mary Daly sees no rate cut in 2023
The data runs counter to signals sent by the Bank of England’s intervention last week, the Bank of Australia’s slower-than-expected rate hike and the sharp contraction in job vacancies in the UK. United States revealed by the Jolts survey. All of which had given rise to hopes that central banks could slow down.
But ” expectations of a more aggressive Fed received significant support from comments by Fed officials themselvesrecalls Jim Reid, of Deutsche Bank. The most obvious came from the San Francisco Fed President [Mary] Daly, who when asked about futures contracts incorporating rate cuts, replied ‘I don’t see that happening at all’. In fact, when it came to rates, she not only said that the committee was going to push them into restrictive territory, but that they would be kept there until inflation receded. “.
Raphael Bostic, his colleague at the Atlanta Fed, used similar language, saying he was in favor of raising the Fed funds rate to 4.5% at the end of the year, which implies a hike of 125 basis points at the end of the year. during the next two FOMC meetings.
Analysts at work
Automotive and transportation stocks stand out. Faurecia gains 2.8%, Valeo 2% and Air France-KLM 3.3%.
Conversely, ArcelorMittal down 3.7%. UBS moved from “buy” to “hold” on the steelmaker, citing in particular the acceleration of production cuts and much higher than expected cost inflation.
Eramet fall for its part of 15.3%. Exane BNP Paribas downgraded the mining group from “outperforming” to “neutral”, while Berenberg underlined that the sector is facing significant challenges, such as the war in Ukraine or the economic slowdown in China.
Accor down 2.3%. Barclays downgraded the hotel group’s stock from “online weight” to “underweight”.