After its surge the day before, the Paris Stock Exchange is falling again, in a market still marked by high volatility, especially as American consumer confidence deteriorated in June. Recession fears continue to be fueled by the pressure that runaway inflation is exerting on central bank monetary policy. Another negative factor is China’s maintenance of its zero Covid policy despite the reduction in quarantine periods imposed on foreign travelers.
Mid-session, the Bedroom 40 fell 1.26% to 6,008.18 points in a listless business volume of 650 million euros. The contracts future on US indices are hovering just below equilibrium.
” The days are repeated and look alike on the side of the economic indicators. This time, it is the business climates of the Richmond and Dallas Feds as well as the Conference Board’s consumer confidence indicators that turn around in June and sink to levels rarely seen outside of recessions. says Véronique Riches-Flores, of Riches Flores Research.
The Fed is only at the beginning of monetary tightening
Fed officials are trying to downplay the risk of a recession, although Jerome Powell said it remains a ” possibility “. But Cleveland Fed Chair Loretta Mester said Wednesday that the next meeting of the monetary policy committee will likely include a discussion around whether to raise rates 50 or 75 basis points, and that would support the latter option if the conditions remain the same on that date. For her, the Fed is only at the beginning “of a cycle of rate hikes while inflation” darkens » consumer confidence.
On the Old Continent, ECB Governing Council member Gediminas Simkus said a 25 basis point hike next month is not set in stone in the face of record inflation. Speaking on the sidelines of the central bank’s annual forum in Sintra, Portugal, he said that in the event of ” inflation persistence, acceleration, 50 basis points should be a monetary policy option for July “. Christine Lagarde, Jerome Powell and the Governor of the Bank of England Andrew Bailey are due to speak this Wednesday as part of the ECB forum.
BofA “bearish” on office real estate
The macroeconomic agenda for the day is dominated by the first estimate of the evolution of consumer prices in June in Germany, as well as by the latest publication of GDP growth in the United States in the first quarter. The market is banking on a further surge in consumer prices to 8.8% year on year across the Rhine, and on a confirmation of a contraction of 1.5% year-on-year in US GDP in the first quarter, after growth 6.9% over the last three months of 2021.
Icade loose 4.9%, Covivio 5.2% and Gecina 5%. BofA analysts downgraded the first two to “underperforming” and the third to “neutral” in a study of European office property companies, which they say face a ” real storm » unfavorable factors. Commercial real estate also fell, like Klepierre (-5%) andUnibail-Rodamco-Westfield (-4.8%).
As a negative from yesterday’s session, the auto sector is also among the biggest decliners. Renault fell by 2.8% and Stellantis by 2.5%. Exane BNP Paribas downgraded the latter from “outperformance” to “neutral”.
against the trend, TotalEnergies gained 1.7%, supported by the rise in crude prices and a note from Bernstein, which went from “online performance” to “outperformance” on the title of the oil company.
Ipsen increased by 2.3%. The group announced that the Food and Drug Administration, the US health authority, had granted priority review to the application for approval of the investigational drug palovarotene for the treatment of patients with fibrodysplasia ossificans progressiva (FOP).