The Paris Stock Exchange fell sharply during the first trade in response to rising tensions in bond markets. Accelerating inflation in the United States does require a decisive response from the US Federal Reserve on Wednesday, thus heightening fears of a recession. The risk is also exacerbated by China’s Zero Covid policy.
At 9:10 p.m. Bedroom 40 lost 1.27% to 6,108.63 points.
Inflation in May across the Atlantic reached 8.6% in one year, the highest level since December 1981, causing a fall in financial markets on Friday, which continued in Asia this morning. Surrounding pessimism has also been exacerbated by a drop in the University of Michigan’s consumer sentiment index to 50.2 points, the lowest level since statistics were created in 1978.
Towards the inversion of the yield curve?
US bond yields continue to decline, especially with short maturities. The rate for 2 years has been trading at 3.1743%, unheard of since 2008, while the 5-year loan was close to 3.35% against 3.1837% for a 10-year loan. This inversion of the curve is generally considered a harbinger of recession.
All eyes are logically focused on the Fed, which will decide on monetary policy on Wednesday. Until last Friday, economists usually expected an announcement to raise the Fed rate by 50 basis points, but some, including Jefferies strategists, now expect an increase of 75 basis points. Therefore, Jerome Powell will have to choose between high inflation and the risk of recession, as the price spike is far from peak.
A fragile majority under Emmanuel Macron
This morning, Asian markets fell more than 3% in Tokyo, Seoul and Hong Kong, while China’s CSI 300 lost 1.1% at the beginning of the close. Shanghai and Beijing have resumed mass testing in the face of a resurgence of the Covid-19 wave, reviving fears about new insulators shortly after health restrictions began to ease.
In France, the results of the first round of parliamentary elections show a fragile majority for the coalition formed around President Emmanuel Macron against the New Alliance Populaire Ecologiste et Sociale (Nupes), led by Jean-Luc Melanchon. Together! According to the Opinion Way, 260 to 300 seats will be collected, and Nupes – from 170 to 210. The absolute majority – 289 deputies out of 377 elected.
Uncertainty surrounding Valnova’s vaccine candidate
Valneva falls by 21%. The group is concerned that a supply agreement with the European Commission for its inactivated all-virus vaccine against Covid-19, VLA2001, is under threat due to a lack of sufficient volumes that could jeopardize the program.
Athos loses 4.3%. The group, which is due to announce a strategic plan on Tuesday, plans to separate its IT services activities into a separate legal entity, BFM Business reported on Monday, citing a source.
TotalEnergies a 1% drop due to falling oil prices due to fears of a slowdown in demand amid rising inflation. In addition, Qatar gave the French oil group a 25% stake in the new joint venture with the national company QatarEnergy (75%) to increase its total liquefied natural gas (LNG) export capacity.
against the trend Thales an increase of 2.8%. Goldman Sachs has resumed coverage of shares with a recommendation to “buy” up to 146 euros. Among other analytical notes, Bernstein noted Orange from “line productivity” to “excess productivity”. The action of the operator is 0.5%.