Cac 40 in the red after poor performance in China, the eurozone and the United States, market news

Traditionally critical for financial markets, May on the Paris Stock Exchange started badly. The stagnation of productive activity in the euro area is in fact added to the new contraction in China and the slowdown in growth in the United States, which raises concerns about the prospects for the world economy.

Shortly after 4 p.m. Bedroom 40 lost 1.65% to 6,425.87 points with a limited business volume of 2 billion euros due to the closure of the British and Chinese markets. The index briefly “instantly collapsed” and fell 3.44% to 6,308.47, caused by panic that affected northern European markets after a possible mistake in passing the order.

In New York, Dow Jones yield 0.21% and Nasdaq Composite 0.30%. On Friday, the Technology and Growth Index ended its worst month since 2008. Activision Blizzard increased by 2.7%. Warren Buffett announced to his shareholders on Saturday that he had increased his stake in video game publishing to 9.5%. apple decreased by 1% as European competition authorities accused the group of impeding competition through the exclusive use of a contactless NFC chip integrated into its iPhone, which could result in a large fine and Apple’s obligation to open its mobile payment system to competitors.

Activity is declining in China, stagnating in Europe and slowing in the United States

The PMI index, published by S&P Global in April, was 55.5 points within nineteen, the lowest in 15 months, while sales prices rose to a record high. ” Eurozone production activity almost stagnated in April, as production recorded the weakest growth since June 2020. says Chris Williamson, chief economist at S&P Global.

He adds that “Respondents not only reported worsening supply tensions exacerbated by the war in Ukraine and new health care restrictions imposed in China, but also highlighted the impact of rising prices and growing uncertainty on economic prospects on demand. “.

Across the Atlantic, the production index, published by the Institute of Supply Management (ISM), fell 1.7 points in April to 55.4, the lowest level since August 2020. The sub-index of prices paid has certainly declined, but this figure remains high. 80, while in March inflation reached 8.5% in one year, there was no such level in 40 years.

In China, the official PMI index fell 2.1 points to 47.4 last month, below a 50-point threshold separating growth and contraction for the second month in a row. Caixin’s industrial PMI also fell 46 points after 48.1 in March. Health restrictions blocking several cities and many companies in the country do not bode well for rapid improvement.

The Fed was waiting for its rates as well as its balance sheet

Markets are nervous two days before the Fed’s monetary decision to raise the rate of federal funds by 50 basis points, the highest level since 2000. The Federal Reserve must also announce its intentions to reduce its balance sheet. The more aggressive tone adopted by several central bank officials indicates other important gestures to stop the inflationary spiral. According to the FedWatch instrument from the CME Group, the market expects the Fed rate to return to 3% or even higher by the end of the year. In the bond market, the inflation-adjusted yield of 10-year US TIPS bonds reached 0.5%, the highest level since March 2020.

The European Central Bank could also raise the bar. Vice President Luis de Gindos has indeed indicated that the ECB may decide to suspend the asset purchase in July pending a future rate hike. This will depend on the central bank’s new economic forecasts, which will be released in June.

The cyclicality and growth of stocks are experiencing difficulties

In addition to the higher cost of credit, the tightening of monetary policy creates the specter of a recession, especially as price pressures are exacerbated by the growth of raw materials associated with the war in Ukraine. They may also intensify as the European Union is expected to try to agree this week on progressive restrictions on Russian oil imports, which could lead to an embargo by the end of the year, Bloomberg reported, citing sources familiar with the discussion. A barrel of Brent from the North Sea fell almost 3% to $ 103.42. TotalEnergys (-0.4%) and Vallourec (-3.3%).

Cyclical stocks are particularly affected by the deteriorating economic environment. Alstom loses 2%, ArcelorMittal 3.5% and Perfectly 2.3%.

Automakers fell 22.6% in new car registrations in France last month as supplies from European manufacturers were hit by the war in Ukraine. Renault yield 1.5% and Stellantis 3.3%. the same for me Fauretia and Valeo which lose 2.7% and 3.5% respectively.

Among the technological reserves, STMicroelectronics a decrease of 3.2%, Soitec by 5.2% and Capgemini by 2.8%.

At other values ​​of growth, Caring loses 2.3%, Hermes 3.4% and LVMH 2%.

Casino place by 4.3%. Citi has reduced the target price for the title of distributor from 27 to 17 euros. Pointing to the uncertainty associated with the rescue plan of the parent company Rallye, the broker confirmed his recommendation of “neutral” for the Casino.

And vice versa, Crossing get 1%. Canadian Alimentation Couche-Tard and the British EG Group are discussing the merger to create a world leader among shops and gas stations, according to Dow Jones, citing sources familiar with the matter. In early 2021, a Canadian group tried to buy Carrefour, an operation that Bercy refused.