The Paris Stock Exchange marks a sharp halt after three straight up sessions at the end of a highly volatile week. Wall Street also lost ground at the open, with the Fed’s most-watched inflation gauge showing no signs of easing. On the contrary, the PCE index of personal consumption expenditure increased by 5.8% year on year in December after 5.7% the previous month. Excluding food and energy, the increase stands at 4.9%, unheard of since 1983.
In addition, the cost of labor increased by 1% in the fourth quarter, or 4% year on year, against 3.7% three months earlier. This latest delivery of indicators ” illustrates the dilemma facing the Fed with price and wage inflation at a 40-year high, while at the same time underlying domestic demand growth is weakening sums up Paul Ashworth, chief US economist at Capital Economics.
Around 4:30 p.m., the Bedroom 40 fell 1.65% to 6,907.88 points in a volume of exchange business expanded by 3 billion euros. In New York, the Dow Jones yields 0.62% and the Nasdaq Composite 0.38%.
“Volatility is not going to subside anytime soon”
” Market volatility is not going to subside anytime soon as buy the dip enthusiasts [achetez en baisse] have a new slogan: ‘sell the rally‘”, summarizes Edward Moya, senior market analyst at Oanda. He adds that many traders are still studying the message from the Fed, and ” the fact is that she missed an opportunity » by being more « hawkish » than expected. The prospect of a series of rate hikes by the US Federal Reserve and geopolitical tensions seem to have taken precedence over the record results of iconic companies such as Apple or LVMH.
Present in the three major New York indices, Apple increased by 4%. The maker of the iPhone reported last night a record turnover over the three months to the end of December. Earnings per share also exceeded analysts’ expectations.
LVMH and Orange at the top of the Cac 40
In Europe, the engine of the recent rebound, cyclical and growth stocks are the most affected, the Stoxx 600 indices for technology (-2.9%), basic resources (-2.7%), automotive (-2.4%) and banks (-1.9%) showing the largest sectoral declines.
First capitalization of the Cac 40, LVMH gained 2.6% after a jump of 5.7% at the start of the session. The world number one in luxury has generated record sales and net profit for the year 2021, thanks to sustained demand for its flagship brands. The group also says it is confident in the continuation of this momentum for the current year.
Orange appreciated by 1.3%, supported by the confirmation by the telecom operator of the appointment of Christel Heydemann as Chief Executive Officer, as of April 4, 2022.
JCDecaux headliner of the SRD
JCDecaux advances by 13.6%, boosted by the growth of 38% over one year of its adjusted turnover to 955.8 million euros in the fourth quarter, against 883.3 million anticipated by the Bloomberg consensus. Berenberg praised the performance, pointing out that the outdoor communications group overrode containment measures and restrictions. The broker is buying the title to target 28 euros.
Conversely, TotalEnergies lost 1.3% on profit taking after gaining 3.5% this week. The retreat ofAirbus (-2.8%) and Saffron (-4.2%) also curbs the trend.
Alstom fell by 8.6% while Exane BNP Paribas downgraded the title of the railway equipment supplier from “outperformance” to “neutral”.
Note also that Veolia (-1.9%) holds 95.95% of the capital and voting rights of Suez following the reopening of its takeover bid for the company, said Thursday a notice published by the Autorité des marchés financiers (AMF). Veolia has also confirmed that it would initiate a squeeze-out procedure at the same price as its offer, ie 19.85 euros per Suez share. Suez’s listing is also suspended pending a press release.