The Paris Stock Exchange continues to decline as continued inflationary pressure fuels expectations of significant monetary tightening by central banks, fraught with the risk of triggering a recession. The European Commission also lowered its growth forecast for the eurozone to 2.6% this year and 1.4% in 2023, from 2.7% and 2.3% respectively forecast in June. Inflation is expected to reach 7.6% in 2022 against the originally forecasted 6.1%.
mid session, Bedroom 40 lost 0.68% to 5,959.66 points due to sluggish sales on this national holiday with a trading volume of 580 million euros. In Milan FTSE Eb loses 1.79% due to political tensions after the refusal of the 5 Star Party to vote on the aid package, thus threatening the government of Mario Draghi. Contracts future on American indices, the yield is about 1%.
The market is waiting for US producer price data this afternoon, while consumer price growth reached 9.1% last month, a new peak in more than 40 years. Also this Thursday, JPMorgan Chase and Morgan Stanley are due to release their second-quarter results.
Up 100 basis points?
The yield on 2-year US bonds, the most sensitive to changes in Fed rates, remains above 10-year bonds at 3.1944% versus 2.9641% for the latter. This yield-curve inversion trend, usually heralding a recession, is the most noticeable since 2000.
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 83.3%, after 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.
In this context, banks in Europe as a whole are falling. In Paris, BNP Paribas, Agricultural loan as well as Societe Generale lose about 1%.
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. North Sea Brent crude falls below $100 after hitting 97.20, its lowest level since March. Prices are down more than 20% from their June highs. Total Energy thus fell by 2.3%.
On the foreign exchange market, the euro is trading at $1.0048 after briefly falling yesterday below parity at $0.9988.
UBS downgraded the rating of the chemical sector
Arkema down 2.5%. 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 flounder by 2.2%. 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.
STMicroelectronics occupies 1%. Quarterly results released this morning by Taiwanese company TSMC came in better than expected and showed that demand for electronic equipment was better than expected. Soitek earns 1%
Air France-KLM rose by 2.8%. 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.