Cac 40 is sinking due to deteriorating production activity in the eurozone, market news

The Paris Stock Exchange emphasizes its losses in response to the sharp decline in production activity in the eurozone, which repeats the decline observed in China. The PMI index, compiled by S&P Global, fell to 55.5 points in the nineteen in April, the lowest level in 15 months, while sales prices rose to a record high.

About 10:30 a.m. Bedroom 40 lost 1.76% to 6418.46 points with a business volume of 850 million euros.

In April, the eurozone’s production activity almost stagnated, and production recorded the weakest growth since June 2020. 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 about the economic outlook for demand. In fact, following a similar trend in production, the growth of total new orders has slowed markedly since the beginning of the year.. says Chris Williamson, chief economist at S&P Global. ” To sum up, the euro area manufacturing sector is going through a difficult period of falling production and rising prices. “, – he concludes.

In China, the official PMI of production fell 2.1 points to 47.4, thus below the critical threshold of 50 points separating growth and decline for the second month in a row. Caixin’s industrial PMI also continued to decline to 46 points from 48.1 in March.

In addition to continuing the quarterly earnings season, the next few days will be interspersed with monetary decisions by the US Federal Reserve and the Bank of England, as well as the April report on employment in the United States.

An eye on Fed rates and balance

If the number of infections in China slows down, Beijing will leave gyms and theaters closed during the three Labor Day holidays, during which markets will remain closed from Monday. Financial centers in Hong Kong and London are also closed today.

On Friday, Wall Street fell sharply after the worst week since late January, ending one of the worst months since the 2020 pandemic. Falling stocks and rising bond yields tighten financial conditions two days before the Fed’s monetary decision, which should lead to an increase in federal funds by 50 basis points, the highest level since 2000. The Federal Reserve could also announce its intention 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.

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

Technology and luxury under pressure

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. Some fear the situation could worsen as the European Union is expected to try to agree this week on progressive restrictions on Russian oil imports, which could lead to a full embargo by the end of the year, Bloomberg reported, citing sources familiar with the debate.

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 and Stellantis yield of almost 3%. the same for me Fauretia and Valeo which lose from 3% to 4%.

Technologies STMicroelectronics (-3.8%) and World line (-2.3%) after the Nasdaq fell more than 4% on Friday.

Among other growth stocks, Caring loses 2.3%, Hermes 2.4% and LVMH 1.3%.

Casino bends by 2%. Citi has reduced the target price for the title of distributor from 27 to 17 euros.

And vice versa, Crossing get 1%. The Canadian Alimentation Couche Tard and the British EG Group are discussing the merger of some of their assets, including BP gas stations and some stores, according to Dow Jones, citing sources familiar with the matter.