Employment in the US gives interest rates freely to the Fed, the stock market did not like it at all, Market News

Employment in the US gives interest rates freely to the Fed, the stock market did not like it at all, Market News


As the labor market remains strong – including the very rapid rise in wages – we doubt the Fed will abandon its stance. hawk due to the current weakness of the shares. This is the opinion of Paul Ashworth, chief economist at Capital Economics, who explains that the stock markets left again this Friday.

At the close of this Friday, the Cac 40 lost 1.73%, falling below the 6,300 point mark for the first time since March 15, to a fairly high volume of 4.8 billion euros. At the low of the session, the flagship index fell more than 2.4%. In New York, the Dow Jones fell 0.59% after falling more than 3% the day before and the Nasdaq Composite fell 0.79% the next day by almost 5%, its biggest drop since 2020. In this latest ranking, the technology and growth stock index, very sensitive to interest rate hikes, has fallen by 22% since the beginning of the year.

In April, the US economy created 428,000 jobs in the non-agricultural sector, up from the 380,000 expected in March (revised from 431,000). The unemployment rate remained stable at 3.6% of the active population, while the average hourly wage increased by 0.3% in one month and 5.5% in one year, in general, as expected.

The increase in hourly wages is admittedly moderate “, but the upward revision of the profits of the previous months shows that the annual growth rate of wages decreased only from 5.6% to 5.5%. In an economy where productivity is collapsing, such a high wage increase is far from in line with the 2% inflation target. “, Further deciphers Mr. Ashworth. In the first quarter, US non-farm productivity fell 7.5 percent (data released Thursday), a rate not seen since 1947.

“As temporary as inflation”

The current figures seem to give the US Federal Reserve ample room to continue raising interest rates in a bid to stem rising prices, fueled largely by supply difficulties and the war in Ukraine, which is currently not shows signs of calming. Since then, ” Increases of 50 basis points could also occur ‘transient’ from inflation “Jeffrey Halley, a market analyst at Oanda, said of the position that Jerome Powell, the Fed chairman, has long defended.

Unless rising inflation quickly reverses its course [les prochains chiffres des prix à la consommation sont attendus mercredi prochain], Central banks may have no choice but to slow growth to slow inflation and maintain credibility That is, to increase the cost of money perhaps even more actively, you judge Emmanuel Cau, in Barclays. At the last meeting on Tuesday and Wednesday, which ended with an increase of 50 basis points Fed fundsthe head of the Federal Reserve had said he did not believe actively »Interest rate increases by 75 points. At the close of Europe, the yield on US 10-year paper was well above 3%, at 3.091%.

Adidas and JCDecaux are borne by China

China also weighed on the trend. Not immediately, no statistics were scheduled there this Friday, but from the impact the country-wide closures have had on companies’ accounts and forecasts. In Paris, JCDecaux fell more than 10%. In the second quarter, growth, with stable range and exchange rates, will be only 15%, a high level but twice lower than analysts had hoped. The number one in the world in outdoor advertising generates about 20% of its turnover in the country, two thirds of which in the mainland. After Shanghai, it is Beijing that could be restrained to stop the spread of Omicron.

Fears that weighed on the “heavy” Cac 40 apartment, that of luxury. L’Oreal, Hermes International, Kering and LVMH lost 2.1% to 4%. Perno Ricard fell 4.9%. “When it published its sales for nine months, the spirits group said the health restrictions were already working.” significant on the activity of the third quarter and that they should continue to disrupt it in the fourth.

It is in Frankfurt Adidas which fell more than 5% at the lowest point of the session, the biggest drop at Dax. The German sports equipment maker suffers from the same restrictions in China, where turnover plunged 35% in the first quarter, but also from bottlenecks in supplies from Vietnam. The forecasts have been revised downwards for the whole year.

Note thatEuropea subsidiary of its active medicinal ingredients Sanofirecorded a jump of 12.6% on the first day of trading.


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