A screen shows the decline in the value of French CAC 40 shares in Paris
LONDON (Reuters) – Wall Street is expected to fall sharply on Friday and European stocks are trading at nearly two-year lows as the growing threat of a recession and multiple rate hikes in recent days continue to undermine investors’ appetite for risky assets.
Futures contracts on the main New York indices signal an opening down 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 lost 2.1% to 5,794.13 points around 10:55 GMT, the lowest since July 5. In London, the FTSE 100 lost 1.79% and in Frankfurt, the Dax fell 2.33%.
The EuroStoxx 50 index is down 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 not better on Wall Street: Goldman Sachs lowered its target for the S&P 500 at the end of the year by 16%, to 3,600 points against 4,300, which implies an additional drop of nearly 5% d by the end of December.
In a note written the day after the Federal Reserve’s announcements, David Kostin, an analyst for the American bank, explains that “a majority of equity investors have taken the view that a hard landing scenario is inevitable, and their priority is the timing, 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 equities have not yet bottomed out, as markets are far from done with inflation shocks. , rising interest rates and recession.
VALUES IN EUROPE
In Europe, no rating sector has escaped the downturn. Among the sharpest declines are the Commodities (-4.96%) and Energy (-4.01%) compartments, against a backdrop of lower oil and base metal prices (-3.6%). % for copper, -5% for nickel, for example).
In the banking sector, Credit Suisse fell 8.97% and hit an all-time low after reports from Reuters that the bank is considering another capital increase, which would be the fourth in seven years.
The only increase in the CAC 40 is for Airbus, which won 0.3% after statements deemed reassuring by its CEO during a day of presentations to investors.
M6 also takes 7.04% pending indicative offers to buy back the stake from RTL Group (a subsidiary of Bertelsmann).
The heightened threat of recession is not enough to halt the rise in bond yields, which continue to benefit from the synchronized rise in interest rates by most major central banks.
US yields are thus moving to their highest since 2011, at 3.7806% for the ten-year and 4.2183% for the two-year.
In the euro zone, the German two-year bond jumped nearly ten basis points to 1.975%, the highest since December 2008, and the ten-year bond exceeded 2% for the first time since 2013.
The latter only briefly retreated after the flash PMI figures.
The flash European PMIs and the multiple comments on the prospects of recession only amplify the decline of the euro and the pound sterling. And the latter is also suffering from the sharp increase in the British authorities’ budget deficit forecasts.
The euro thus dropped 0.82% against the dollar to 0.9755, the lowest since 2002, and the pound sterling lost 1.99% to 1.1033 dollars, the lowest since 1985.
The dollar index, which measures the fluctuations of the greenback compared to a reference basket, on the contrary shows an increase of 0.69%, the highest since May 2002.
The yen fell 0.51% after the rebound of more than 1% triggered Thursday by the intervention of the Japanese authorities in the market.
The oil market is once again bent in the face of 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 to raw materials quoted in the American currency.
Brent fell 3.08% to 87.67 dollars a barrel and US light crude (West Texas Intermediate, WTI) fell 3.5% to 80.57 dollars.
(Written by Marc Angrand, edited by Jean-Stéphane Brosse)