The Paris Stock Exchange fell for the second session in a row, the fall in stocks was accompanied by a fall in the bond market. Rising producer and consumer prices in the US really increase the likelihood of aggressive action by the Fed at the end of the month. The quarterly results of US banks are also disappointing. Market more sensitive to revenue disappointments, says Invesco’s Georgina Taylor. ” There is a potentially one-sided reaction to bad news at the moment, which could add fuel to the fire. ” she continues.
JPMorgan Chase fell 4% in New York after announcing a temporary suspension of share purchases to bolster capital in the face of a worsening economic environment. The bank reported earnings per share of $2.76 versus an expected $2.88. Morgan Stanley (-3.6%) was hit by a sharp downturn in the investment banking division. Its EPS was $1.39, 14 cents below the consensus estimate. In Paris, BNP Paribas, Agricultural loan as well as Societe Generale lose from 2.7% to 3.8%.
EC lowers growth forecasts
Shortly after 4:00 pm Bedroom 40 fell 1.94% to 5,883.91 as a result of sluggish trading volume on this national holiday, when 1.4 billion euros were sold. In Milan FTSE Eb a 3.47% drop driven by political tensions following the refusal of the 5 Star Party to vote on the aid package, threatening Mario Draghi’s government. On Wall Street Dow Jones and NASDAQ Composite decreased by almost 2%.
The European Commission cut its growth forecast for the eurozone to 2.6% this year and 1.4% in 2023 from 2.7% and 2.3% respectively estimated in June. Inflation is expected to reach 7.6% in 2022 against the originally forecasted 6.1%. On the foreign exchange market, the euro settled below parity at $0.9975 after bottoming at $0.9952.
The yield of 2-year US bonds, the most sensitive to changes in Fed rates, remains above 10-year bonds at 3.2235% versus 2.9873% for the latter. This yield-curve inversion trend, usually heralding a recession, is the most noticeable since 2000.
Brent falls below $100
According to the CME Group’s Fedwatch tool, the market estimates the likelihood of a 100 basis point Fed rate hike on July 27 at 85.7%, following a 75 basis point hike in June. Jerome Powell recently insisted on the Fed’s “unconditional” determination to fight inflation, even at the risk of a recession.
Expectations of tighter monetary policy from the Fed are also putting pressure on oil prices due to fears of lower demand in the face of the risk of a recession. Brent oil from the North Sea falls below $100 after hitting 65.01, the lowest level since Russia’s invasion of Ukraine in late February. Prices are down more than 20% from their June highs. Total Energy waive 5% and Vallorec 5.7%.
UBS downgraded the rating of the chemical sector
Arkema drop 5%. During this period, UBS downgraded the rating of the entire European chemical sector.” fragile due to the risks of energy rationing and reduced consumer confidence. The broker went from “neutral” to “sell” on the title.
Athos bend 5.4. S&P Global Ratings downgraded SSII’s credit rating to ‘BB’ from ‘BBB-‘ on Wednesday, relegating it to the junk bond category. The downgrade reflects a negative outlook due to the group’s plan to split its business into two separate legal entities.
Air France-KLM rose by 1.2%. The airline announced that it has signed a definitive agreement with the Apollo fund, which will allow the Franco-Dutch airline group to receive an investment of 500 million euros.