A screen shows the falling value of French CAC 40 shares in Paris
LONDON (Reuters) – Wall Street is expected to fall sharply on Friday and European stocks trade at nearly two-year lows as the growing threat of a recession and multiple rate hikes in recent days continue to dampen investor appetite. for risky assets.
Futures contracts on major New York indices point to a downward opening of 1.14% for the Dow Jones, 1.35% for the Standard & Poor’s 500 and 1.49% for the Nasdaq.
In Paris, the CAC 40 fell 2.1% to 5,794.13 points around 10:55 GMT, the lowest level since July 5. In London, the FTSE 100 lost 1.79% and in Frankfurt, the Dax fell 2.33%.
The EuroStoxx 50 index fell 2.41%, the FTSEurofirst 300 2.07% and the Stoxx 600 2.53%.
The latter fell to its lowest level since December 2020, its decline having accentuated after the publication of the first results of the S&P Global PMI surveys, which show a marked contraction in the activity of private companies in the euro zone.
And morale is obviously no better on Wall Street: Goldman Sachs lowered its year-end target for the S&P 500 by 16% to 3,600 from 4,300, implying a further drop of almost 5% by the end of the year. from December. .
In a note written the day after the Federal Reserve announcements, David Kostin, an analyst at the US bank, explains that “most equity investors have viewed a hard landing scenario as inevitable, and their priority is timing.” , the depth and duration of a possible recession, as well as investment strategies for that scenario”.
For its part, Bank of America, in its weekly update on investment flows, points out that stocks have not yet bottomed, as the markets are far from over with the shocks of inflation, rising interest rates and recession.
VALUES IN EUROPE
In Europe, no rating sector has escaped recession. Among the most pronounced decreases are the Commodities (-4.96%) and Energy (-4.01%) compartments, in a context of lower oil and base metal prices (-3.6%), % for copper, -5% for nickel, for example) .
In banking, Credit Suisse fell 8.97% to hit a record low after reports from Reuters that the bank is considering another capital increase, which would be its fourth in seven years.
The only increase in the CAC 40 is for Airbus, which gains 0.3% after statements considered reassuring by its CEO during a day of presentations to investors.
M6 also takes 7.04% of the pending indicative offers to buy back the stake from RTL Group (a subsidiary of Bertelsmann).
SPEED
The heightened threat of recession is not enough to stop the rise in bond yields, which continue to benefit from the synchronized rise in interest rates by most major central banks.
Thus, US yields are reaching their highest level since 2011, at 3.7806% for ten-year bonds and 4.2183% for two-year bonds.
In the euro zone, the German two-year bond jumped nearly 10 basis points to 1.975%, the highest level since December 2008, and the 10-year bond topped 2% for the first time since 2013.
The latter only pulled back briefly after the preliminary PMI figures.
CHANGES
Flash European PMIs and multiple comments on recession prospects only amplify the fall in the euro and sterling. And the latter also suffers from the sharp increase in budget deficit forecasts by the British authorities.
The euro thus fell 0.82% against the dollar to 0.9755, the lowest since 2002, and the pound sterling lost 1.99% to $1.1033, the lowest since 1985.
The dollar index, which measures the fluctuations of the greenback against a reference basket, shows, on the contrary, an increase of 0.69%, the highest since May 2002.
The yen fell 0.51% after a rally of more than 1% triggered on Thursday by the intervention of the Japanese authorities in the market.
OIL
The oil market is once again bowing to the risk of deterioration in global demand in the coming months, to which must be added the appreciation of the dollar, which is generally unfavorable for raw materials priced in the US currency.
Brent fell 3.08% to $87.67 a barrel and US light crude (West Texas Intermediate, WTI) fell 3.5% to $80.57.
(Written by Marc Angrand, edited by Jean-Stéphane Brosse)