Paris (awp/afp) – The markets are increasingly betting on a global economic recession in the near future, a scenario that weighed on stocks, oil, the bond market and risky assets on Wednesday.
In Europe, Paris lost 0.81%, London 0.88%, Frankfurt 1.11% and Milan 1.36%.
After a lower opening, Wall Street oscillated around the balance: the Dow Jones yielded 0.22%, the S&P 500 0.18% and the Nasdaq 0.10% around 4:05 p.m. GMT.
Oil prices fell by around 3% and bitcoin fell by 4.78%, falling back below the $20,000 threshold ($19,870 around 4:05 p.m. GMT).
On the bond market, long-term interest rates lost between 10 and 15 basis points.
“Fears of an impending global slowdown are gaining ground,” said CMC Markets analyst Michael Hewson.
Even Jerome Powell, Chairman of the US Federal Reserve (Fed), mentioned this scenario, acknowledging to Congress that a rapid increase in key rates could cause a recession, even if this is not the desired effect.
The last action of the American central bank – a very marked increase in key rates of 0.75 percentage point – had shaken the equity markets last week.
He also admitted that the strength of inflation had “manifestly surprised” the monetary authorities and he warned that “other surprises” could arise, during a hearing which runs until Thursday.
Jerome Powell, however, wants to be reassuring and assured that the American economy was sufficiently “solid and well placed to face a monetary tightening”.
These comments have also allowed stock market indices to see their losses reduced compared to the start of the session. “The markets hate uncertainty, so they were afraid that Powell would make an aggressive speech and in the end, it’s the classic speech that doesn’t say much,” explains Lionel Melka, director of research at Homa Capital.
As for the bond market, “it expects a recession” according to the analyst. The ten-year German rate fell to 1.628% against 1.73% at the close of the previous day, and the American yield at the same maturity reaching 3.158% (-11.8 basis points) around 4:05 p.m. GMT.
Raw materials in bad shape
Oil prices were down around 3%, carried away by recession fears combined with President Biden’s desire to intervene to stem the escalation in fuel costs triggered by inflation.
The barrel of American WTI with August maturity, which is the first day of use as a benchmark contract, fell 3.38% to 105.83 dollars, while Brent with the same maturity yielded 2.56% to 111 $.66 around 4:00 p.m. GMT.
Metal prices also plunged, especially copper, pushed to a low for more than a year.
Mining stocks clinked glasses, such as Umicore in Belgium (-8.02%) after the presentation of an investment plan for 2026, Voestalpine in Austria (-13.11%), ArcelorMittal in France (-9.56%) or Glencore (-6.89%) in London.
The refusal of the merger between the Indian steelmakers Tata Steel and German ThyssenKrupp (-7.98%) by the European Commission, confirmed on Wednesday by the Court of Justice of the EU, weighed more heavily on the sector.
“The fact of no longer being able to merge and create synergies is rather bad news for the steelmaking sector”, according to Lionel Melka.
pessimistic BASF
The chemical group BASF (-5.81%) must prepare for more difficult times after a good first half, its CEO Martin Brudermüller told an industry forum in Berlin, as reported by the Handelsblatt. Other chemical values such as Bayer (-2.13%), Brenntag (-4.17%) or Covestro (-5.48%) were driven.
On the exchange side
The pound stabilized at 1.2278 dollars around 4:00 p.m. GMT, after a plunge of almost 1% against the dollar sparked by the publication of inflation at 9.1% in May in the United Kingdom – a new record in 40 years. -, which weighs ever more heavily on household budgets and the British economy.
The euro rose 0.47% against the dollar to 1.0583 dollars.
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