The Paris Stock Exchange fell on Wednesday as investors brace for further central bank rate hikes amid fears of recession and the energy crisis.
Around 10:30 a.m., the CAC 40 fell 0.33% after recovering 0.19% on Tuesday following a sharp drop of 1.2% on Monday.
Despite better-than-expected statistics in services in the United States, global growth does not look very strong, which is causing a problem for crude prices, noted Edward Moya, an analyst at Oanda.
China’s exports and imports stalled in August, penalized by global economic uncertainties as well as the continuation of anti-Covid restrictions that are weighing on activity in the Asian giant.
The threat of recession in the United States and Europe, combined with soaring energy prices, is weakening demand for Chinese products.
In Germany, industrial production fell again in July. The explosion in energy prices is forcing a growing number of SMEs to suspend their activity.
Investors are now waiting for the meeting of the European Central Bank (ECB) on Thursday and a Council of European Energy Ministers called to consider new measures to reduce gas and electricity consumption.
Analysts are expecting a 75 basis point hike. Investors are hoping for a rapid decline in inflation without the eurozone economy slipping into recession.
The ECB’s mission has become incredibly complicated. It must both fight inflation in an environment characterized by a high risk of recession and, at the same time, it must take into account the risk of market dislocation and the weakness of the euro, underlines Gergely Majoros, member of the Committee d’Investissement de Carmignac, in a note.
Before the ECB, the Bank of Canada is meeting on Wednesday after raising its key rate from 1.5% to 2.5% to fight inflation in July.
In the United States, the prospect of a continuation of the accelerated monetary tightening, which began in the spring, was reinforced on Tuesday by the good health of activity in services, the main sector of the first world economy.
Tencent does not play Ubisoft’s game
Ubisoft plunged 12.07% to 38.25 euros around 10:10 a.m. after the Chinese group Tencent took a 49.9% stake in the capital of the holding company of the Guillemot family, founder of the French video game giant.
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Tencent is also authorized to increase its direct stake in Ubisoft from 4.5% to 9.99% of the capital and voting rights.
The transaction underscores Ubisoft’s strategic value in a consolidating industry, though it does indeed resolve the status quo of control for the company, Morgan Stanley said in a note.
Energy behind
Among other values, those related to energy continued to decline: TotalEnergies fell 1.74% to 50.81 euros in the crowd of falling crude prices.
The French producer of renewable energies Neoen for its part fell by 7.08% to 37.30 euros after announcing the launch of a green bond issue with the option of conversion and/or exchange into new or existing shares (Green OCEANEs) 2027 for a nominal amount of 300 million euros.
On the industry side, Vallourec sold 1.84% for 9.83 euros and CGG 1.95% for 0.89 euros. The second largest steelmaker in the world, ArcelorMittal (-2% to 22.27 euros), was also weighed down by the drop in demand for steel.