” Geopolitical tensions, high inflation, declining consumer confidence, uncertainty about rate hikes and unprecedented quantitative easing, as well as their impact on global liquidity, are very likely to have a negative impact on the Mondial economy. This is the warning made by the boss of a powerful American bank JPMorgan, Jamie Dimon, is by no means a surprise, but it still sent a chill through the financial markets. Especially after the institution, the largest in the United States by assets, disappointed to announce that its profit for the second quarter was cut by 28% due to the creation of reserves to cover possible losses related to the risk of recession. More precisely, it recorded $1.1 billion (the same in euros) of reserves, while $3 billion was released from reserves last year. In New York, the name fell by 4%. His sister Morgan Stanley is hardly in better shape: its share fell by 1.4%. Punished by a sharp slowdown in investment banking and M&A advisory activities amid high market volatility, the bank’s profit fell to $2.4 billion (the same in euros), or $1.39 per share, for the quarter ended June 30 , compared with $3.4 billion, or $1.85 per share, a year earlier. All of this bodes poorly for Citigroup and Wells Fargo, which are due to make quarterly commitments on Friday at the same time as global asset manager BlackRock.
In the stock market, operators continued to withdraw, those who were already cautious in the face of the growing risk of recession. A stronger-than-expected acceleration in US inflation to 9.1% year-on-year in June and the producer price index to 11.3% over the same period do not support the thesis that the US Federal Reserve System (FED) will hit hard again in June 26 and 27 meeting, even if it means sacrificing growth. The previously dominant scenario of a 75 basis point increase like in June is now giving way to a mega 100 basis point increase, according to CME Group’s Fedwatch Barometer. That implied probability is now 83.3%, down from 0% a week ago.
Oil has fallen to its lowest level since the invasion of Ukraine
This is unlikely to reassure operators, especially as the European Commission cut its growth forecasts for the eurozone to 2.6% this year and 1.4% in 2023, while raising inflation to 7.6% in 2022 from 6.1 % of initial forecast. On completion, Bedroom 40 loses 1.41%, to 5,915.41 points, with a transaction volume of 2.8 billion euros (the July 14 holiday obliges). On the other side of the Atlantic, the gloomy environment leads to a drop of 1.3% in the three main indexes. Dow Jones, Nasdaq Composite and S&P500. In the foreign exchange market, the single currency revolves around parity with the dollar. Finally, oil is falling on fears of an impending recession. North Sea Brent oil dips below $100 after hitting 94.5, lowest level since Russian invasion of Ukraine, hurt TotalEnergieswhich ended with a fall of 4.66%.
Among other values, Arkema down 3.43% after UBS cut its rating from neutral to sell and cut its price target from €128 to €82.
at his side Athos lost 4.56%. S&P Global Ratings downgraded SSII’s credit rating from ‘BBB-‘ to ‘BB’, returning it to unnecessary bond (speculative bond). This decline is accompanied by a negative outlook as the group plans to split its business into two separate legal entities.