The rebound in the bear market sparked by hopes of a less aggressive approach from central banks is showing signs of running out of steam. The latest activity indicators in the euro zone indeed suggest that a recession is almost inevitable in the region. In the United States, job creations in the private sector show, with 208,000 new jobs, according to ADP, against 200,000 expected and 185,000 in August (revised from 132,000), that the slowdown necessary for inflation to slow down does not is not yet in sight. Discussions continue at OPEC headquarters in Vienna for further production cuts from member countries of the enlarged cartel (OPEC+).
Around 2:30 p.m., the Bedroom 40 lost 0.90% to 5,985.07 points. The contracts future on American indices yielded around 0.9% while the S&P 500 gained 5.7% in two days, its best performance over such a period since March 2020. It had hit its lowest point of the year on Friday and chained three quarters of decline in a row.
The composite PMI index (synthesis between industry and services) established by S&P Global fell by 0.8 points to 48.1 in September in the euro zone, its lowest level since January 2021. The final PMI indices for the month of September suggest that price pressures in the region have not yet started to ease, although activity appears to be declining. We believe that some economies, including Germany, are already in contraction and expect the whole of the Eurozone to fall into recession in the fourth quarter. commented Jessica Hinds, Senior Economist for Europe at Capital Economics.
Banking and automotive stocks are the most affected with declines of 3.7% to 6% for Michelin, Faurecia and Valeoand around 3% for BNP Paribas, Agricultural credit and Societe Generale. Also sensitive to changes in the economy, commercial real estate Unibail-Rodamco-Westfield fall of more than 6%.
The hope that the Fed eases its foot damaged
The sharp fall in job offers in the United States in August, the most marked in almost two and a half years, helped to maintain the feeling that the Fed could opt for a more flexible approach to its monetary policy. But the statistic will not prevent further aggressive rate hikes in the short term.
” An accommodating inflection [des banques centrales] requires more indications pointing to weaker growth and a decisive slowdown in inflationinsists Emmanuel Cau, head of European equity strategy at Barclays. We don’t think equities are out of the woods yet “, he insists.
Inflation is the most serious problem facing the Federal Reserve and ” it might take a while to solve it, central bank governor Philip Jefferson said on Tuesday. ” Thinking that Friday’s low was the last is a risky betwarns Charles Lemonides, co-founder of the hedge fund ValueWorks, quoted by Bloomberg. We’re probably in the middle of a major relief rally, but the Fed has indicated that it will continue to tighten policy until inflation is out of the system. “, he argues.
OPEC+ set to cut throughput
The barrel of Brent from the North Sea is stable at 91.50 dollars pending the decision of OPEC + this Wednesday on its production quotas. UAE backs Saudi-Russian proposal for 1-2 million barrels per day cut, which could be spread over several months, Financial Times reports, which would frustrate efforts of the United States to prevent such a decision. TotalEnergies yields 0.3% and Vallourec 4.5%.
” The higher energy prices are, the more central banks have to rein in demand to bring them down. That’s why a big OPEC production cut could well have an undesirable effect and lead to profit-taking and a drop in oil prices today. “, explained this morning Ipek Ozkardeskaya, senior analyst at Swissquote.