The Paris Stock Exchange is moving to two-month lows and Wall Street loses more than 1% in the first half hour. The announced end of the accommodative monetary policies relaunched during the emergence of the pandemic and the tightening of health restrictions in China are rekindling fears of a contraction in the global economy, or even of a recession.
Morgan Stanley cautious on European stocks
Shortly before 4 p.m., the Bedroom 40 fell by 1.84%% to 6,144.60 points in a business volume of 1.7 billion euros. The Parisian index is now losing 14% over the year and almost 17% compared to its absolute record of January 5 (7,384.86), thus approaching the “bear market” zone. In New York, the Dow Jones decrease of 1.19% and the Nasdaq Composite 1.55% after closing their fifth straight weekly decline on Friday, the longest series in more than 10 years.
At European level, the 19 Stoxx 600 sector indices are in the red, starting with those of leisure travel and basic resources, down more than 3%. Accor fell by 3.1% and Eramet by 5.2%.
Reflecting investor fears, the iTraxx index, which measures the cost of protecting against default risk on European corporate bonds, hit its highest level since 2020. European stocks held up surprisingly well until last week, so it’s no surprise they’re being caught up in the bad news as the ECB prepares to tighten monetary policy, says Est Dwek, head of investments at Flowbank. Strategists at Morgan Stanley also believe that the risks are increasing for the margins of European companies.
Chinese foreign trade almost at a standstill
In China, exports rose 3.9% year on year in April, their weakest pace since June 2020, while imports stagnated amid near-paralysis of the economy linked to the tightening of health restrictions. in Shanghai, where the confinement could be extended until the end of the month. Prime Minister Li Keqiang also warned about the labor market situation, which he described as ” complicated and serious “, which does not prevent the authorities from clinging to their “zero-Covid” policy.
In the United States, the Federal Reserve announced last Wednesday a 50 basis point increase in its interest rates in an attempt to stem the surge in prices. The higher-than-expected job creations in April also strengthened the “hawks” camp within the Fed. On the bond market, the yield on the 10-year US bond is hovering around 3.12%, thus maintaining its highest level since the end of 2018. Technology stocks are logically affected. Meta Platforms (Facebook) dropped 1.2%, Amazon 1.3% and Apple 1.5%. In Paris, STMicroelectronics and Soitec give up 1.6% and 4.4% respectively.
Putin denounces “unacceptable threats”
The Russian president justified his intervention in Ukraine by the aggressive attitude of Western countries towards Russia. In his opening speech at the 1945 victory celebrations, Vladimir Putin said this morning that Russian forces are defending the homeland from a ” absolutely unacceptable threat “. According to him, Russian troops are continuing the battle against Nazism in Ukraine, while emphasizing the importance of ” to do everything so that the horror of a world war does not happen again “.
Chance of the calendar, this May 9 is also Europe Day. The leaders of the G7 countries pledged on Sunday to move gradually towards an embargo on Russian oil, thus joining the proposals of the President of the European Commission, Ursula von der Leyen. However, this proposal comes up against the refusal of Hungary. TotalEnergies fell by 3.2% in the wake of the 2.1% decline in the barrel of Brent from the North Sea.
Euroapi and Alstom stars of the session
Luxury stocks are under pressure. LVMH loses 1.8%, L’Oreal 2.8%. Also sensitive to the economic situation in China, Pernod Ricard down 2.9%.
Among other major cyclicals, Schneider-Electric loses 2.5%, Great 2.4% and Michelin 1.6%.
Ubisoft (-7.8%) suffered profit taking after a jump of almost 33% in three weeks. At the end of April, Bloomberg reported that Blackstone and KKR were interested in the group. According to the Seeking Alpha site, the Guillemot family (nearly 16% of the capital) would consider joining forces with a private equity firm to acquire the video game publisher.
against the trend, Alstom gains 3.4%. The railway equipment manufacturer has announced that it has won an order worth nearly 2.5 billion euros from the railway operator of the Land of Baden Württemberg, in southwestern Germany.
Biggest rise in SRD, Euroapi increased by 7.3%. JPMorgan has started monitoring the specialist in active pharmaceutical ingredients, split from Sanofi, with a recommendation to “overweight” to aim for 17 euros. Sanofi yields for its part 1.2%.