The Paris Stock Exchange cuts its losses as Wall Street begins a rebound at the opening thanks in particular to the further reduction in the American trade deficit. At the same time, investors are trying to gauge the magnitude of the Fed’s next monetary tightening on September 21st. The acceleration in the growth of activity in services in the United States last month pleads in fact for energetic action. According to CME Group calculations based on Fed funds futures contracts, the probability of a rate hike of 75 basis points is estimated at 82%, compared to 69% a week ago.
Around 4 p.m., the Cac 40 lost 0.27% to 6,088.32 points in a trading volume of 1.3 billion euros. In New York, the Dow Jones takes 0.34%. Particularly sensitive to the monetary environment, the Nasdaq Composite rebounded 0.62% after having lined up seven declines in a row, which had not happened since the end of 2016.
The Fed’s Beige Book while waiting for the ECB
The Federal Reserve must also publish, in the evening, its Beige Book, which is the most complete update on activity in recent weeks. The Bank of Canada, for its part, must unveil its monetary decision on Wednesday. An increase of 75 basis points is anticipated. The ECB will take over tomorrow and a significant tightening is expected as the inflation rate reached 9.1% over one year in August in the euro zone and should reach 10% in the coming months.
Beyond the monetary context, the markets are faced with the slowdown in the growth of Chinese foreign trade, hampered by health restrictions and the drop in demand, which is heightening fears about the global economy. A decline which comes on top of the disruptions in supplies due to the post-Covid recovery and the risk of an energy crisis in Europe against a backdrop of war in Ukraine. Vladimir Putin also threatened on Wednesday to cease all deliveries of Russian oil and gas to Europe in the event of a cap by Brussels on the prices of its hydrocarbons.
Ubisoft falls, Engie leads the Cac 40
Ubisoft 14.6% drop. The group announced to authorize the Chinese Tencent to rise up to 9.99% of its capital, but will not be able to go beyond for eight years. If control of the video game publisher is now secure for at least five years, the file loses its speculative aspect.
Within the CAC 40, Engie increased by 5% following the European Commission’s proposal to cap prices at 200 euros per megawatt hour for electricity produced outside gas-fired power stations. In Rotterdam, European gas futures contracts fell 7% to 223 euros per megawatt hour after falling 2.5% on Tuesday. At the European level, the Stoxx 600 of “utilities” rose by 2.6%, thus signing the best sector performance.
Saffron gains 1.6% supported by a note from Goldman Sachs, which raised its price target on the title from 134 to 150 euros. The broker, which maintains its recommendation to “buy”, has also included the engine manufacturer in its “conviction list” of European stocks.