The initial burst will not have held. The Paris Stock Exchange continues to decline, while Wall Street fails to materialize the rebound suggested this morning by the bullish reversal in contracts future on the three major New York indices. Volatility remains high after the rally at the start of the week which followed three consecutive quarters of market declines on both sides of the Atlantic. The announcement of a sharp cut in OPEC+ oil production adds to the ambient excitement.
Around 4 p.m. on Bedroom 40 fell 0.98% to 5,926.60 points in a limited business volume of 1.2 billion euros. In New York, the Dow Jones plaice of 0.68% and the Nasdaq Composite 0.53%.
Investors brushed off the prospect of a less aggressive turn from central banks on interest rates, which was behind the recent rally in global indices. The increase from 29,000 to 219,000 in weekly jobless claims in the United States, against 204,000 anticipated, is finally taken for what it is: bad news after the low of five months hit a week earlier. The market is especially awaiting the publication, tomorrow, of the official report of the Department of Labor on employment in September to get a clearer idea of the health of the American economy. And hence the magnitude of the next rate hike by the Federal Reserve.
The Fed stays the course despite the risk of recession
Wednesday’s publication of the ISM services activity index in the United States dashed hopes of an inflection by the Fed, with the employment component reflecting in particular a rebound in hiring to a six-month high. On the same day, the ADP survey on job creations in the private sector (+208,000 against 200,000 expected) had given a similar indication, supported by the upward revision of the previous month’s balance.
These data run counter to the signals deemed reassuring sent by the Bank of Australia’s lower-than-expected rate hike and the sharp contraction in job vacancies in the United States revealed by the Jolts survey. So many elements that could have raised hopes that central banks could slow down.
But ” expectations of a more aggressive Fed received significant support from comments by Fed officials themselvesrecalls Jim Reid, of Deutsche Bank. The most obvious came from the San Francisco Fed President [Mary] Daly, who, when asked about the fact that futures contracts included rate cuts, replied ‘I absolutely do not see that happening’. In fact, when it came to rates, she not only said that the committee was going to push them into restrictive territory, but that they would be kept there until inflation receded. “.
Crude at its highest since mid-September
His counterpart at the Atlanta Fed, Raphael Bostic, used similar language, saying he was in favor of raising the Fed funds rate to 4.5% at the end of the year, which implies a hike of 125 basis points at the end of the year. during the next two FOMC meetings.
Brent crude from the North Sea is stabilizing around $93.60, in view of its highest levels for three weeks after the OPEC+ decision to cut production by 2 million barrels per day, an unprecedented scale since 2020. The upward pressure on oil prices threatens to prolong the current period of high inflation, especially since black gold is denominated in dollars, which increases the bill in the euro zone. TotalEnergies lost 0.7%, in the wake of Shell (-4.2% in London), which warned that the third quarter performance of its gas activities and its refining margins would be lower than those of the second.
Steel and mining under the fire of analysts
Automotive and transportation stocks stand out. Faurecia earn 5%, Valeo 3.5% and Air France-KLM 4%.
Conversely, ArcelorMittal down 4.1%. UBS moved from “buy” to “hold” on the steelmaker, citing in particular the acceleration of production cuts and much higher than expected cost inflation.
Eramet fall for its part of 16.8%. Exane BNP Paribas downgraded the mining group from “outperforming” to “neutral”, while Berenberg underlined that the sector is facing significant challenges, such as the war in Ukraine or the economic slowdown in China.
Accor down 2%. Barclays downgraded the hotel group’s stock from “online weight” to “underweight”.