(CercleFinance.com) – After spending the day in positive territory, gaining up to 2.5%, the Parisian index tipped into the red around 5 p.m., before ending the session with a loss of 0 .43%, at 6,368 points, following having suffered a fall of -200 Pts on the highest of the day (in a straight line, without the slightest rebound, between 6,559 and 6,351): this is one of the most spectacular counterbalances of the year …and it’s much worse on Wall Street.
The downward momentum is also blowing on the E-Stoxx50 (-0.9%) and Frankfurt (-0.6%) while London limits the breakage (+0.2%).
Across the Atlantic, the indices relapsed heavily: it did not get any better at mid-session with up to -1,100 Pts on the Dow Jones (-3.3%), -3.7% on the S&P500 and -5 .2% for the Nasdaq Composite (below 12,300Pts), following having signed one of the strongest increases of the 21st century the day before on the day of the Fed’s decision (+3% for the S&P500, +3.2% for the Nasdaq Composite).
No improvement is emerging 2 hours before closing… we had to wait until 8:40 p.m. the day before.
This morning, the markets had welcomed in a somewhat unbridled (and inconsistent?) way the assertion that the FED would not go beyond a half-point hike in the main interest rate, whatever the inflationary context, while some of Jerome Powell’s colleagues had mentioned and supported a ‘shock strategy’ of +75 basis points.
Another change in monetary policy, the central bank has indicated that it will begin to reduce the size of its gigantic balance sheet by -47.5 billion dollars from next month, before going to -90 billion dollars, or 1% of the outstanding amount, which today amounts to nearly 9,000 billion dollars.
At his press conference, Jerome Powell, the institution’s chairman, assured Americans that the Fed would do everything possible to quickly bring inflation under control and set itself the objective of a ‘soft’ landing for the economy, i.e. an ebb of inflation without the onset of recession.
But the bond markets are skeptical to say the least: the yield on 10-year US Treasury bonds quickly rose from 2.92% around 8:40 p.m. to 2.965% this morning, then 3.04% this followingnoon, at the highest since 2018.
Opposite also spectacular on our OATs (from -9pts to +2.5pts at 1.536%) and from -7pts on Bunds to +3pts at 1.011%.
With the Fed meeting now over, investors learned, unsurprisingly, of the Bank of England’s decision to raise its key rate from 0.75% to 1.00% (also caught between galloping inflation and deteriorated business outlook): this seems insufficient and the Pound tumbles -2% once morest the Dollar towards 1.237.
On the ‘macro’ front, there were the figures for industrial production in France on the program. In March, it fell in manufacturing industry (−0.3% following −0.9%) as in industry as a whole (−0.5% following −1.2%), according to data corrected for seasonal and working day variations (CVS-CJO) from INSEE.
In particular, production fell once more in transport equipment (−2.8% following −1.5%): it fell sharply in the automotive industry (−7.3% following −5.4%) while ‘it is stable in other transport equipment (following +1.2%).
Production over the whole of the first quarter of 2022 was nevertheless higher than that of the same period of the previous year in manufacturing industry (+1.2%) and in industry as a whole (+0, 3%).
There were also figures in the United States and in particular non-agricultural productivity: this plunged by -7.5% in the United States in the first quarter of 2022 at an annualized rate, according to the preliminary estimate of the Department of Labor. , a fall much greater than that expected on average by economists (-4%).
This plunge reflects a 2.4% drop in production even though the number of hours worked increased by 5.5%. Combined with a 3.2% increase in hourly wages, it leads to an 11.6% surge in unit labor costs.
The number of weekly registrations for unemployment benefits increased by +19,000 the week of April 25 in the United States, settling at 200,000, once morest 181,000 a week earlier: it was a 50-year low.
The four-week moving average stands at 188,000, up 8,000 from the revised level of the previous week.
Finally, during the week of April 18, the number of people regularly receiving benefits stood at 1,384,000, a decrease of 19,000 compared to the figure for the previous week.
The Dollar is not too affected and remains stable over 24 hours towards $1.0530 ( once morest 1.0640 Wednesday evening) and the real half-surprise of the day is the continuation of the oil surge towards $112 at London (Brent), which supports Total Energies with +2.2%, thanks to which the CAC40 remains positive.
In the news of French companies, Societe Generale publishes net income, underlying group share up 21.3% to 1.57 billion euros for the first quarter of 2022, as well as gross income of underlying operating up 37.6% to 2.96 billion.
Crédit Agricole SA says it has opted for a ‘prudent’ provisioning regarding its exposure to Russia and indicates in a press release that over the first three months of the year, net income, underlying group share, was down 19 %, at 756 million euros.
Legrand unveils net income group share up 13.3% for the first quarter of 2022, at 258 million euros, despite an adjusted operating margin before acquisitions (at 2021 scope) down one point to 20, 6% of sales.
Finally, Air France-KLM publishes a net result of -552 million euros for the first three months of the year, an improvement of 930 million over one year, as well as an operating result of -350 million , but a positive EBITDA of 221 million.