The Paris stock market continues to fall, as persistent inflationary pressures raise expectations for significant monetary tightening by central banks, risking a recession. The European Commission also cut its growth forecast for the eurozone to 2.6% this year and 1.4% in 2023, down 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%.
In the middle of the session Bedroom 40 lost 0.68% to 5,959.66 points due to apathetic business volume on this national holiday with 580 million euros. in Milan, FTSE Eb loses 1.79%, due to political tension after the 5 Star Party refused to vote for the aid package, thus threatening Mario Draghi’s government. Contracts future on American indices, the yield is about 1%.
This afternoon, the market awaits the United States producer price statistics, while the increase in consumer prices last month reached 9.1%, a new peak in more than 40 years. Also this Thursday, banks JPMorgan Chase and Morgan Stanley are due to release their results for the second quarter.
Up to 100 basis points?
The yield on 2-year U.S. Treasuries, the most sensitive to Fed rate changes, remains higher than the 10-year maturity at 3.1944% versus 2.9641% for the latter. This yield curve inversion dynamic, which generally heralds a recession, has been most prominent since 2000.
According to CME Group’s Fedwatch tool, the market estimates the probability of a 100-basis-point Fed rate hike on July 27 at 83.3%, 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.
In this context, banks in Europe are generally failing. in Paris, BNP Paribas, Agricultural credit and Sausage General lose about 1%.
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 97.20, its lowest level since March. Prices are down more than 20% from June highs. TotalEnergies thus fell by 2.3%.
In the foreign exchange market, the euro is trading at $1.0048 after briefly dipping below parity yesterday at $0.9988.
UBS downgrades chemical sector
Arkema decreased by 2.5%. 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 flounder by 2.2%. 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.
STMicroelectronics occupies 1%. Better-than-expected quarterly results released this morning by Taiwan’s TSMC showed that demand for electronic equipment held up better than expected. Soitec earns 1%
Air France-KLM rose in price by 2.8%. 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.