(BFM Bourse) – The CAC 40 lost 1.66% on Monday (not without falling -3.4% in the morning under the influence of a strange crash for European markets that opened on May 2), at the beginning of the week you should see the US Federal Reserve operating a new turn of the screw.
Throughout the session, there was a gloom on the Paris Stock Exchange on Monday, “ignited” by a crash (and to tell the truth inexplicable) that took place at European level around 10:00 am. In a context still characterized by tightening monetary policy in the face of inflation, slowing global growth, the conflict in Ukraine and the persistence of major epidemics in China that raise fears of stagnation in the second world economy. The color index fell 1.66% to 6,425.61 points.
On Friday, the CAC 40 had a limited recovery, without changing the direction of the weekly return (down 0.72%). Following the close of European markets, the session turned to a correction for the US indices after results lower than the expectations of the technology giants and the publication of a PCE inflation index that continues to accelerate. The Dow Jones industrial average fell 2.77%, the S&P 500 fell 3.63% and the Nasdaq Composite fell 4.17% – a performance not seen since 2020.
A crack that closed four months particularly unfavorable for the shares. The S&P 500 is actually down 13.3% since the beginning of the year, which is just the biggest drop in its history in this four months. Ή the third largest drop, if we start counting from the start of the S&P 90 in 1928, this predecessor of the S&P 500 actually fell 16.8% in the first four months of 1939 and 28.2% in the same period of 1932. Nasdaq Composite – created in 1971 with the first American electronic stock exchange – no possible ambiguity, is indeed the worst start of the year ever observed, ie -21% at the end of April. Surprisingly, the respectable Dow Jones did better, as its fall did not even reach -10% in four months.
This Monday, it was not yet time for a recovery for the New York Stock Exchange, S&P and Dow were still yielding 0.25% at the time of the European close, while the Nasdaq appeared almost stable.
Production under pressure
If Chinese markets (like the Indian or London Stock Exchanges) are closed this Monday, it’s a “bank holiday”, and news from China is worrying, official Chinese PMIs show a slowdown in both sectors. manufacturing and services in April, under a strict quarantine framework.
In Europe, growth slowed again in the eurozone manufacturing sector, while sales were at a record high, according to PMIs from S&P Global (which completed its acquisition of IHS Markit earlier this month). year). For the third month in a row, the global PMI for manufacturing in the eurozone fell from 56.5 in March to 55.5 (a 15-month low) last month.
Above all, the final production index of processing fell to 50.7 (March: 53.1), low of 22 months and mainly very close to the limit of 50 below which production shrinks. “Eurozone manufacturing activity virtually stagnated in April, with production recording its weakest expansion since June 2020. The companies surveyed not only reported a deterioration in supply intensity, exacerbated by the war in Ukraine and “The new health restrictions imposed on China, but also highlighted the impact of price increases and rising uncertainties on the economic outlook for demand,” said Chris Williamson, who did not see things getting worse. soon, on the contrary.
“The downward trend in production is likely to intensify. The corporate outlook indeed continues to be much lower than its long-term average, while the slowdown in the growth of new orders and the ratio of accounting orders to finished goods indicate a decrease. production in the coming months.
CAC values in red with the exception of Carrefour
The week will also be marked by a meeting of the Monetary Policy Committee (FOMC) of the United States Federal Reserve. It is still happening that we are witnessing a spontaneous telephone increase of 0.5 points in the key interest rates on Wednesday, but the operators are afraid to see the announcement of an increase in June at least equal to it. If not higher, some observers are now expecting an additional +0.75 points tightening on June 15, something that would have been unheard of since 1994.
No notable news also came to enliven the ranking of Paris, where within the CAC only the Carrefour action (+ 1.1%) managed not to end in the red, due to the considered defensive nature of its activity. Thus 98% of the sample of the star index ended in red, regardless of sector or style: ArcelorMittal (-4%) suffered the largest drop, followed by Safran and Schneider (-3.5%) and Teleperformance (-3 , 3%)) or even Stellantis (-3%) and Veolia (-2.9%).
The outlook for energy demand weighed on oil prices, with Brent falling 2.03% to $ 104.96 (-2.24% to $ 102.35 for the WTI).
The euro tried to maintain the $ 1.05 limit despite falling 0.38% at the end of the day to 1.010, at the end of a very volatile day and for the foreign exchange market.
Guillaume Bayre – © 2022 BFM Bourse