The Paris Stock Exchange continues to decline, penalized by fears of recession. Investors fear the economic impact of new health restrictions in China, the tightening of central bank policy to stem inflation, and the risk of energy shortages in Europe. Risk aversion is leading to a “flight to quality” towards bonds and the dollar, while the barrel of Brent from the North Sea is down nearly 4%.
Around 2:30 p.m., the Bedroom 40 lost 0.32% to 5,977.14 points in a still anemic business volume of 960 million euros. The contracts future on US indices oscillate between equilibrium and a decline of 0.8%.
Latest indicator to date, the Zew index of the morale of German investors and financial analysts deteriorated more than expected to -53.8 points in July, its lowest level since December 2011, against -40.5 estimated by the market and -28 in June. Immediately after the statistic, the yield on the German 10-year bond hit 1.0824%, its lowest level since May, before returning to around 1.1420%.
The euro-dollar a hair’s breadth from parity
The yield on the 10-year US bond eased by 7 basis points to 2.9235%, thus returning below the 3% threshold on the eve of the publication of the consumer price statistics for June in United States and two days before the first publications of results from American banks for the second quarter.
In this context of risk aversion, the American currency reached a 20-year peak against a basket of six other currencies, including the euro, which is flirting with parity after touching 1.0001 dollar this morning. Although planned for a long time, the closure of the Nord Stream 1 gas pipeline for maintenance operations arouses a certain mistrust, and political leaders fear that it will remain closed beyond the ten days planned, the gas weapon constituting a leverage for Moscow in the face of Western sanctions.
The latest comments from Fed officials highlight the central bank’s determination to tighten monetary policy and the risks that entails. Atlanta Fed Chairman Raphael Bostic reiterated his determination to continue tightening monetary policy and said he favored a 75 basis point hike in the Fed funds rate at the end of the month. Esther George, his colleague at the Kansas City office who opposed a mega hike last month, warned that hasty rate hikes could prove counterproductive.
EDF and Technip Energies do the splits
Biggest drop in SRD, Technip Energies fall of 11.8%, driven by the plunge of more than 36% of Saipem in Milan, whose capital increase of 2 billion euros has so far only been subscribed at 70%. The final result will be known on Friday.
Unibail-Rodamco-Westfield down 4%. RBC Capital downgraded the title of the commercial real estate group from “online performance” to “underperformance” by reducing its price target from 77 to 42 euros.
Arkema abandons for its part 5.6%. JPMorgan went from “neutral” to “underweight” on the specialty chemicals group by reducing its target price from 142 to 82.50 euros.
Among other analyst ratings, Oddo BHF lowered Wavestone (-5.8%) from “outperformance” to “neutral”.
Renault loses 2%. The automaker saw its global sales drop 29.7% in the first half, affected by the semiconductor crisis and the shutdown of its activities in Russia, its largest market. The manufacturer also announced that its portfolio of orders in Europe remained “ at a high level and represented 4.1 months of sales as of June 30.
Bonduelle 10.6% drop. The processed vegetable specialist has warned that the growth of its turnover and its current operating margin should be lower than the previously announced objectives of respectively +3% and +3.6% at constant scope and exchange rates over the whole of exercise.
Conversely, EDF increased by 5.7%. The French government is expected to pay more than 8 billion euros to take full control of the electrician and wants to complete the operation in the fall, reports Reuters, citing people familiar with the matter.
Thales advance of 2.8%. The defense electronics group has announced the acquisition of the Dutch cybersecurity specialist OneWelcome for 100 million euros.