The Paris stock exchange fell for the second session in a row, with the fall in stocks accompanied by a fall in the bond market. Rising U.S. producer and consumer prices do raise the prospect of aggressive Fed moves at the end of the month. Quarterly results of US banks are also disappointing. There is a market more sensitive to revenue disappointments, notes Georgina Taylor of Invesco. ” At the moment, there is a potentially one-sided reaction to bad news that could add fuel to the fire “, she continues.
JPMorgan Chase fell 4% in New York after announcing a temporary suspension of share purchases to shore up its capital amid a worsening economic environment. The bank reported earnings per share of $2.76 versus the consensus estimate of $2.88. Morgan Stanley (-3.6%) was affected by a sharp slowdown in the investment banking division. Its earnings per share were $1.39, 14 cents below consensus. in Paris, BNP Paribas, Agricultural credit and Sausage General lose from 2.7% to 3.8%.
EC lowers growth forecasts
A little after 4:00 p.m Bedroom 40 fell 1.94% to 5,883.91 points due to lackluster business volume on this national holiday with a trading volume of 1.4 billion euros. in Milan, FTSE Eb down 3.47%, due to political tensions after the 5-Star Party refused to vote for the aid package, thus threatening Mario Draghi’s government. On Wall Street, Dow Jones and Nasdaq Composite decreased by almost 2%.
The European Commission cut its growth forecast for the eurozone to 2.6% this year and 1.4% in 2023, from 2.7% and 2.3%, respectively, estimated in June. Inflation is expected to be 7.6% in 2022, compared to the initial forecast of 6.1%. On the foreign exchange market, the euro settled below parity at $0.9975 after hitting a low of $0.9952.
The yield on 2-year U.S. Treasuries, the most sensitive to Fed rate changes, remains higher than the 10-year maturity at 3.2235% versus 2.9873% for the latter. This yield curve inversion dynamic, which generally heralds a recession, has been most prominent since 2000.
Brent drops below $100
According to CME Group’s Fedwatch tool, the market is pricing in an 85.7% chance of a 100 basis point Fed rate hike on July 27 after a 75 basis point hike in June. Jerome Powell recently insisted on the Fed’s “unconditional” determination to fight inflation, even at the risk of a recession.
Expectations of monetary tightening by the Fed are also weighing on oil prices amid concerns that demand will weaken in the face of recession risks. Brent North Sea crude fell below $100 after hitting 65.01, the lowest since Russia invaded Ukraine in late February. Prices are down more than 20% from June highs. TotalEnergies give up 5% and Vallourec 5.7%.
UBS downgrades chemical sector
Arkema a drop of 5%. UBS has downgraded the entire European chemicals sector during this period” fragile due to the risks of energy rationing and deterioration of consumer confidence. The broker moved from “neutral” to “sell” on the name.
Athos bend 5.4. S&P Global Ratings on Wednesday downgraded SSII’s credit rating from BBB- to BB, returning it to the junk bond category. This decline is accompanied by a negative outlook as the group plans to split its business into two separate legal entities.
Air France-KLM rose in price by 1.2%. The airline has announced that it has signed a definitive agreement with the Apollo fund, which will see the Franco-Dutch airline group receive a €500m investment.