A trader works at the Frankfurt Stock Exchange
by Claude Chendjou
PARIS (Reuters) – European stock markets ended lower on Friday and Wall Street was also in the red at mid-session amid risk aversion linked to the “profit warning” from FedEx, the American logistics and delivery giant parcels, and the warnings of the International Monetary Fund (IMF) and the World Bank (WB) on the evolution of the world economic situation.
In Paris, the CAC 40 ended down 1.31% at 6,077.3 points. The British Footsie lost 0.62% and the German Dax lost 1.66%.
The EuroStoxx 50 index fell by 1.17%, the FTSEurofirst 300 by 1.61% and the Stoxx 600 by 1.58%.
Over the whole week, the Parisian index fell by 2.17% and the pan-European Stoxx 600 by 2.35%.
The WB estimated on Thursday evening that central banks’ simultaneous interest rate hikes in the face of persistent inflation could favor a global recession next year, and the IMF said it expected a deeper economic slowdown in the third trimester.
It is in this unfavorable economic context that FedEx announced Thursday the cancellation of its annual financial forecasts while the American group is considered a reliable barometer of the global economy.
The predictions come as investors already have their sights set on the US Federal Reserve (Fed) monetary policy meeting, scheduled for Wednesday. A rise in interest rates of 75 basis points is widely anticipated by the market.
In the euro zone, while inflation for the month of August was confirmed at 9.1% over one year, an unprecedented level since the creation of the single currency, the Vice-President of the European Central Bank (ECB ) Luis de Guindos insisted on Friday on the continuation of the rise in rates despite the risk of recession.
This risk has heightened in the UK with retail sales figures showing a sharper than expected decline in August.
The only positive news of the day came from China, where production and retail sales rose stronger than expected in August.
A sign of nervousness in the markets, the volatility index hit a two-month high in the United States at 28.45 points, while in Europe it ended up 4.27% at 26, 43 dots.
VALUES IN EUROPE
FedEx’s warning logically weighed on its European competitors: the German group Deutsche Post fell by 6.58%, the British Royal Mail by 8.08%, the Swiss Kuehne & Nagel by 4.09% and the Dutch DSV Panalpina by 6.19%.
The European air transport sector (-2.46%) was also heckled by the strike of controllers in France: Air France-KLM dropped 4.77%, ADP 2.43% and easyJet 3.62%.
Elsewhere, Uniper fell 1.74%, a German government draft seen by Reuters shows the struggling group is unlikely to receive aid until October 31.
In Italy, Banca Monte Dei Paschi Di Siena fell 5.07% after shareholders approved a capital increase project.
AT WALL STREET
At the close in Europe, the Dow Jones fell 0.86%, the Standard & Poor’s 500 1.10% and the Nasdaq 1.38%.
All the main compartments of the S&P-500 are in the red, with the industrials sector (-2.21%) showing one of the biggest declines.
In the wake of FedEx announcements, which fell 23.20%, the transport index on the Dow Jones fell 5.11%, to a low since February 2021.
The courier and logistics groups UPS and XPO Logistics yielded 4.42% and 6.78% respectively. Amazon drops 2.62%. Airlines Southwest Airlines and JetBlue lost 4.59% and 1.85% respectively.
In foreign exchange, the dollar is stable against other major currencies and should end the whole week in positive territory thanks to the expected sharp rise in rates in the United States next Wednesday.
The euro, up 0.09% to $1.0008, rose just above parity with the greenback.
The pound sterling, penalized by the statistics of retail sales in the United Kingdom, fell to a new low of 37 years against the American currency, at 1.1351 dollar.
Bond yields in Europe ended higher again, supported by the latest statements from Christine Lagarde and Luis de Guindos, respectively President and Vice-President of the ECB, on the need to prioritize the fight against inflation despite the risk of recession.
That of the two-year German Bund hit a peak in session since 2011 at 1.62% before reducing its closing gains to 1.549% (+4.7 points). The ten-year gained about three points to 1.764% after rising in session to 1.817%, the highest since mid-June.
In the United States, the yield on ten-year Treasury bonds fell slightly to 3.451%, but the two-year one rose by more than one point to 3.886%.
Oil prices are on the rise again after their sharp drop in previous sessions, but they should show their third consecutive weekly decline over the whole week, mainly due to fears about demand.
Brent rose 1.14% to 91.88 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.87% to 85.84 dollars.
(Written by Claude Chendjou, edited by Sophie Louet)