” As the labor market remains stable, including very rapid wage growth, we doubt that the Fed will abandon its position. hawk due to the current weakness of shares. This is the mood of Paul Ashworth, chief economist at Capital Economics, who explains that the stock markets were released again this Friday.
At the end of this Friday, Cac 40 lost 1.73%, falling below the threshold of 6,300 points for the first time since March 15, in a fairly high amount of 4.8 billion euros. At the minimum of the session, the flagship index fell by 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 by 0.79% the day after falling nearly 5%, the biggest drop since 2020. According to the latter indicator, the index of technology stocks and growth stocks, which is very sensitive to rising interest rates, has fallen by 22% since the beginning of the year.
In April, the US economy created 428,000 jobs in the non-agricultural sector, exceeding the expected 380,000, as in March (revised from 431,000). The unemployment rate remained stable at 3.6% of the active population, while the average hourly wage rose by 0.3% in one month and by 5.5% in a year, which is broadly in line with expectations.
The increase in hourly wages is recognized as modest. ” but the upward revision of wages in previous months shows that annual wage growth fell from only 5.6% to 5.5%. In an economy where productivity is falling, such high wage growth is far from meeting the 2% inflation target. “, Further deciphers Mr. Ashworth. In the first quarter, the productivity of the US non-agricultural sector fell by 7.5% (data published on Thursday), which has not been observed since 1947.
“As fleeting as inflation”
Today’s figures seem to give the US Federal Reserve a wide margin of appreciation to continue raising interest rates in an attempt to stem the price spike, largely caused by supply difficulties and the war in Ukraine, which is currently showing no signs of reassurance. Since then, ” There may also be an increase of 50 basis points ‘transitional’ than inflation “Said Jeffrey Halley, an Oanda market analyst, referring to a position that Jerome Powell, the Fed chairman, had long defended.
” If rising inflation does not change course quickly [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 confidence “That is, perhaps, to raise the value of money even more actively,” said Emmanuel Kau of 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 said he did not consider ” actively »Increase the rate by 75 points. At the European close, the yield on US 10-year securities is well above 3%, up to 3.091%.
Adidas and JCDecaux are burdened by China
China has also influenced this trend. Not directly, no statistics were programmed there this Friday, and according to the impact that the confinements introduced in the country have on the accounts and forecasts of companies. In Paris, JCDecaux fell by more than 10%. In the second quarter, growth at constant scales and exchange rates will be only 15%, which is a high level, but twice lower than analysts expected. The world’s number one outdoor advertising generates about 20% of its turnover in the country, two-thirds of which is on the mainland. After Shanghai, Beijing may be restricted to stop the spread of Omicron.
Fears that also weighed on the “heavy” compartment of the Cac 40, a luxury coupe. L’Oreal, Hermes International, Caring and LVMH lost 2.1% to 4%. Pernod Ricard fell by 4.9%. Publishing its nine-month sales, the spirits group said health restrictions had already taken effect. considerable about the activities in the third quarter and that they should continue to disrupt it in the fourth.
There are in Frankfurt Adidas which fell more than 5% to the lowest part of the session, the biggest drop was Dax. The German sports equipment manufacturer suffers from the same restrictions in China, where turnover fell by 35% in the first quarter, as well as bottlenecks in supplies from Vietnam. Forecasts for the year are generally revised downwards.
Note thatEuropea subsidiary of active pharmaceutical ingredients Sanofijumped 12.6% on the first day of trading.