The Paris Stock Exchange is about to complete its seventh weekly decline in eight weeks, while Wall Street retreats at the opening. The change in the nature of the war in Ukraine after Moscow took control of the Ukrainian nuclear power plant in Zaporozhzhya, the largest in Europe, reinforces the mistrust of risky assets. Especially since the surprise acceleration of job creation in the United States is in line with the monetary normalization planned by the Fed.
The US economy added 678,000 jobs in February, against 423,000 expected, and the January balance was revised up from 14,000 to 481,000. The unemployment rate fell by 0.2 points to 3.8%, its lowest level since February 2020. Average hourly wage growth also recorded a surprise slowdown to 5.1% year on year, after 5, 5% in January (revised from 5.7%). ” These figures will support the Fed in its tightening plan, but the slowdown in wage growth undoubtedly reduces the pressure on officials [de la Fed] in terms of implementing a series of aggressive rate hikes in the coming months commented Michael Pearce, Senior US Economist at Capital Economics.
Around 4 p.m., the Bedroom 40 fell 3.64% to 6,146.34 points after a low at 6,114.05, a level not seen since April 2021. For the time being, the index has dropped 8.83% over the week, its worst weekly performance since March 2020 (-19.86%), during the first confinement. The volume of business is particularly substantial with 4 billion euros traded on the values of the index. In Frankfurt, the Dax down 3.38%. In New York, the Dow Jones loses 0.87% and the Nasdaq Composite 0.91%.
Challenging week for banks and autos
All the European Stoxx 600 sector indices are in the red, starting with those of the banks and the automobile, respectively yielding 4.9% and 4.4%. ” No one buys a new car when commodity prices go through the roof sums up Michael Hewson, chief market analyst at CMC Markets. Michelin gives up 7.1%. The tire manufacturer has decided to halt production for a few days in certain European factories due to supply difficulties due to the crisis in Ukraine. Renault lost another 4.4%, bringing its fall to more than 24% over the week due to its exposure to Russia, which represents its second market. Valeo down for its part by 5.7% while Berenberg lowered its price target on the equipment manufacturer from 34 to 25 euros.
French bank most exposed to Russia, Societe Generale fall of 8.6%. The sector is also dragged down by a rush towards safe havens, which is causing bond yields to ease. That of the 10-year American Bond fell by 11 basis points to 1.7307% and that of the German Bund of the same maturity fell back into negative territory at -0.0790%. Gold hit a 2-day high of $1,950.88 an ounce before falling back around 1,955.20. On the currency front, the euro lost 1.45% to 1.0906 dollars.
Elior, Coface and Scor also attacked
This climate of growing uncertainty accentuates the scale of the variations on the market and the V2X index, which measures the implied volatility of the Euro Stoxx 50, reached 47.4171 points this morning, passing above the threshold of 45 for the first time since June 2020.
Elior drop of 8.4% the day after the surprise announcement of the resignation of its general manager Phillipe Guillemot, with immediate effect. Citi has also downgraded the title of the collective catering group from “purchase” to “neutral”.
The war in Ukraine and Western sanctions against Russia affect the reinsurer score, which fell by 9%. Specialized in export credit insurance, Coface plunged 11.5%.