Cac 40: A cold surprise in the stock market in the face of rising gas and concerns about monetary policies

Cac 40: A cold surprise in the stock market in the face of rising gas and concerns about monetary policies

(BFM Bourse) — The Paris index ended the session nearly 2% lower, the market worried about Federal Reserve monetary policy and rising gas prices.

The CAC 40 starts the week with a significant correction. The main index of the Paris Stock Exchange closed 1.80% lower, its largest percentage drop since early July, at 6,378.74 points.

All European indices fell. At the end of the session, the Stoxx Europe 600 lost 0.96%. In Frankfurt, the DAX 40 lost more than 2.3% while the FTSE MIB in Milan fell 1.6%. The FTSE index in London limited its decline to 0.2%.

European markets gave up intra-session gains, and Wall Street’s opening in red supported the trend.

During the summer, the various exchanges advanced significantly. But now “investors are wondering if the recovery hasn’t gone far,” said Craig Erlam, market analyst at Oanda.

Investors fear a stronger monetary tightening from the Federal Reserve, while US Central Bank President Jerome Powell speaks Friday afternoon at a seminar in Jackson Hole, Wyoming. His intervention will be the main meeting of the market.

“The Fed is arguably unhappy to see markets pricing rate cuts in 2023, and as a result, financial conditions have softened over the past few weeks — eliminating the purpose of putting pressure on demand and prices,” confirms Bruno Cavalier. Oddo BHF. “We wouldn’t be surprised if Powell delivered a tough speech emphasizing that the Fed is not on the horizon with rate cuts. Quite the contrary.”

continuous flow of gas

Market pricing is increasing at a 75 basis point (0.75 percentage point) increase at the Federal Reserve’s September meeting. According to CME Group’s FedWatch tool, investors attribute a 56.5% probability of this rate hike versus a 43.5% chance of a 50 basis point increase.

The trend in Europe is also punished by the announcement by Gazprom on Friday that gas deliveries via the Nord Stream 1 gas pipeline will be halted from August 31 to September 2, according to the Russian group, citing maintenance requirements. This announcement prompted gas prices that continue to rise. On Monday, they are still advancing, with the TTF contract for September delivery up 13.5% to €277.50.

“The sword of Damocles hanging over Europe went to stay there,” Kate Jukes, an analyst at Societe Generale, was quoted by AFP as saying.

The euro is at its lowest level since 2002

The return of risk aversion sent the dollar higher, with the dollar benefiting from its safe haven status. Consequently, the euro fell below parity against the US currency and fell to its lowest level since 2002. The single currency in the eurozone thus lost 1.1% to $0.9933.

Oil gives way to its side of the field. And Brent North Sea crude for October delivery fell $1.66 to $95.06. The October contract for light sweet crude oil (WTI), quoted on the NYMEX, fell 1.35 cents to $89.15.

In terms of values, the vast majority of SBF 120 components are finished. The automotive sector was hit again: equipment manufacturers Faurecia and Valeo lost 8.3% and 5%, while manufacturers Stellantis and Renault fell more than 3.4%.

Aircraft maker Dassault Aviation has lost nearly 3% as the government studies ways to organize private jet flights.

Excluding SBF 120, biotech company Neovacs gained 13.7% after declaring the end of the recovery plan by paying off commitments of 3.3 million euros.

Written by Julian Marion

Tradingsat Tradingsat – © 2022 BFM Bourse

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