L’Europe finit dans le rouge avec les craintes sur l’inflation et les taux

L'Europe finit dans le rouge avec les craintes sur l'inflation et les taux


EUROPEAN STOCK MARKETS END LOWER

by Claude Chendjou

PARIS (Reuters) – European stock markets closed sharply lower on Monday and Wall Street was also trading in the red mid-session amid risk aversion linked to fears over Russian gas supplies in Europe, worries on inflation and the prospect of sustained monetary tightening despite the risks of a recession.

In Paris, the CAC 40 ended down 1.8% at 6,378.74 points. The British Footsie lost 0.22% and the German Dax lost 2.32%.

The EuroStoxx 50 index fell 1.93% and the FTSEurofirst 300 fell 0.86%. The Stoxx 600 fell 0.96% after hitting a session low from July 28.

The volatility index, seen as a barometer of fear, hit a nearly three-week high in the US at over 23 points and the EuroStoxx 50 volatility index jumped 11.34% to 27.36 points.

Caution in the markets was fueled by Gazprom’s announcement to close the Nord Stream 1 gas pipeline, which supplies Europe, for maintenance from August 31 to September 2. On the Amsterdam Stock Exchange, the price of natural gas soared in the session by more than 20% to a record level of 292.5 euros per megawatt hour before falling to 278 euros.

In this context of very high energy costs, the Bundesbank estimated on Monday that the risk of recession in Germany is increasingly likely and that inflation could exceed 10% this fall.

Citi, for its part, forecasts 18% inflation in early 2023 in the UK and believes the Bank of England (BoE) may have to raise its rates to 6%-7% to bring it down.

In the United States, where inflation and slowing growth are also a concern, the second GDP estimate will be released on Thursday, while on Friday investors expected the speech by Jerome Powell, chairman of the Federal Reserve (Fed), at the annual central bankers’ conference in Jackson Hole, will provide a more accurate picture of the future path of rates.

A Reuters poll released on Monday shows the Fed is likely to opt for a 50-point rate hike in September, having already raised the cost of credit by 225 points since March.

VALUES IN EUROPE

In Europe, the most significant falls occurred in the assets of cyclical compartments such as the automotive industry (-3.67%), banks (-1.49%) and industry (-2.27%), while energy (+0. 61%), basic resources (+0.38%). %) and the defensive healthcare sector (+0.55%) posted the best gains.

Renault (-4.42%) and Stellantis (-4.02%) were among the sharp decliners in the CAC 40 along with Société Générale and BNP Paribas, which lost 3.02% and 2.48% respectively.

In the rest of Europe, Credit Suisse, which announced the appointment of a new chief financial officer, Dixit Joshi, and a new deputy chief, Francesca McDonagh, lost 0.83%.

After Gazprom’s announcement, Uniper, the main importer of Russian gas in Germany, fell 7.72% and its parent Fortum 4.39%.

ON WALL STREET

At closing time in Europe, the Dow Jones fell 1.32%, the Standard & Poor’s 500 1.54% and the Nasdaq 1.90%, pending Friday’s intervention by Jerome Powell after that investors fear a more restrictive policy from the Fed after statements by several officials of the institution to that effect.

“All eyes are on Jackson Hole,” said Craig Erlam, market analyst at OANDA, noting that this expectation is making the market nervous.

In values, giants of new technologies such as Apple (-1.58%) and Tesla (-2.42%) are penalized by the continuous rise in the yield of bonds, while banks, such as JPMorgan Chase (-1 .61%) and Bank of America (-2.11%), are suffering concerns about economic growth.

Cinema operator AMC Entertainment fell 36.58% after its competitor Cineworld announced the possibility of filing for bankruptcy. Ford, down 4.65%, suffered an unfavorable court decision after a fatal crash involving an F-250 pickup truck in Georgia in 2014. The automaker also announced the loss of 3,000 North American jobs. North and India.

In mergers and acquisitions, the health group Signify Health jumped almost 32.97%, the Bloomberg agency having reported that Amazon (-2.90%) and other companies were candidates for its takeover bid.

CHANGES

The euro, especially affected by the gas crisis, is trading at 0.9934 dollars (-1%), after hitting a historical low of 0.9929.

The dollar, up 0.84% ​​against a basket of international benchmark currencies, is moving to a six-week high on the prospect of higher interest rate hikes in the United States and the risk of a deeper recession in the US. Europe.

SPEED

Bond yields continued to rise with the 10-year German Bund rising more than six basis points to 1.293% after gaining nearly 15 points on Friday.

In the United States, the ten-year Treasury yield rose 3.5 points to 3.025%, crossing the 3% mark for the first time since July 21, while the two-year yield rose 5.7 points up to 3.324%. This inversion of the curves is the signal of an anticipation of a recession in a horizon of two years.

OIL

Affected by fears of a drop in demand, the oil market is once again in the red after three consecutive sessions of increases.

Brent fell 1.08% to $95.68 a barrel and US light crude (West Texas Intermediate, WTI) fell 0.94% to $89.92.

TO FOLLOW ON TUESDAY:

The S&P Global PMI “flash” indices for the month of August in Europe.

(Written by Claude Chendjou, edited by Laetitia Volga)

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