(BFM Bourse) – The Paris Bourse increased its losses towards 6,400 points, back to two-week lows. Fears of a severe tightening of US monetary policy and the deterioration of the health situation in China overshadow the expected re-election of French President Emmanuel Macron on Sunday.
The Parisian index fell more than 2% back to two-week lows at 6,430 points. The late morning announcement of an improvement in the business climate in Germany failed to extricate the CAC 40 from its sharply downward trend.
The Ifo index rose by 1 point in April to 91.8 points while a decline of 89 points was expected. This good news on the macroeconomic front is overshadowed by the strong concerns of operators about the deterioration of the health situation in China while Beijing has ordered stricter containment measures in the face of the explosion of Covid-19 cases.
Black clouds are therefore gathering in the stock market sky, while the weekend was not easy for the stock indexes. The President of the US Federal Reserve cooled investors on Thursday by confirming a probable 0.5 point increase in the Fed Funds rate at the next meeting, after 0.25 point at the previous one. In Europe, the idea of a first rate hike this summer could materialize as ECB President Christine Lagarde said on Friday that a hike before the end of the year was a scenario to consider.
A cocktail that displeases operators because of the rise in bond yields. The yield on US government bonds is at 2.84% for the ten-year, after returning last night to its highest since the end of 2018, at nearly 2.95%. In Europe, the 10-year German Bund, the benchmark in the euro zone, is trending towards 1%.
On the values front, very few survivors manage to stay in positive territory. Engie rebounded by nearly 2%, supported by Deutsche Bank, which raised its recommendation to hold on to the purchase of the former GDF Suez. Vinci reduced its gains to less than 1%, the title also benefited from an analyst rating from JPMorgan which increased its target to 114 euros (against 113) while maintaining its advice to overweight.
Slightly up in the first exchanges, Vivendi is now stable after announcing a 13.4% growth in its turnover in the first quarter, driven by the dynamism of its subsidiaries Canal + and Havas.
Conversely, Technip Energies reduced its losses to 1.5%, in the wake of the decline in black gold prices. However, the group published accounts that exceeded expectations with recurring operating income up 17% in the first quarter, materializing a margin of 6.6%, against 5.9% a year ago. Excluding activity in Russia, the group anticipates for this year an adjusted turnover of between 5 and 5.5 billion euros and an adjusted operating margin of at least 6.5%.
Fears of a slowdown in global growth, highlighted by the Chinese situation are weighing on “commodity” stocks. ArcelorMittal drops 7.55%, Vallourec gives back almost 6%. Luxury stocks are not spared either: Kering, Hermès International and LVMH drop more than 4% at midday.
Ubisoft increases its earnings and soars by 11% at midday, still sought after on the stock market while it remains considered by analysts as a privileged target in a sector in full consolidation.
Erytech Pharma soars by 24% after announcing the sale of its American production site to Catalent for a total amount of 44.5 million dollars.
Big disappointment on the other hand for Valneva (-15.51%) while the European agency asked the Nantes biotech for additional data to be able to approve the VLA2001 vaccine in Europe.
On the foreign exchange front, the euro fell to its lowest level since April 2020, at $1.0736, and erased its gains after Emmanuel Macron’s victory. Black gold increases its losses, under the fear of a global economic slowdown. Brent lost 3.81% to 101.72 dollars a barrel and WTI fell 4% below 98 dollars.
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