The pediment of the Palais Brongniart, former headquarters of the Paris Stock Exchange. (photo credit: Adobe Stock / )
(CercleFinance.com) – The CAC40 has erased half of its initial losses, it only lost -1.3% to 6,087 against -2.6% to 6,018 this Monday morning.
The week got off to a bad start in all the other places on the planet, in reaction to the worsening energy crisis and its possible repercussions on the European economy.
The Euro-Stoxx50 remains heavy with -1.8%, in the wake of Frankfurt with -2.1%: the score will not really change by 5:30 p.m. because Wall Street is closed on September 5.
It is London that is doing the best with a decline of only 0.3%: the current British Foreign Minister, Liz Truss, was indeed elected on Monday, September 5, to become the new Prime Minister of United Kingdom to replace Boris Johnson, news that seems to reassure the ‘City’ (Liz Truss has promised to ‘break the strikes’ which are paralyzing part of the British economy).
The Russian gas giant Gazprom indicated on Friday evening, after the close of European markets, that it no longer plans to restart the Nord Stream 1 gas pipeline as planned, after several days of maintenance work (a compressor ‘leaks’, the one intended to replace it remains blocked in Canada).
The announcement rekindled the specter of an energy shortage in Europe, reinforcing the scenario of an entry into recession and calling into question the ability of European leaders to find a credible response to the crisis.
‘The latest developments in this case are likely to lead to further destruction of demand and put politicians in a delicate situation as winter approaches’, reacts at RBC.
On the foreign exchange market, the worsening energy crisis is weighing heavily on the euro, which is now trading below 0.99 against the dollar (new low at 0.9880), a first in nearly 20 years .
Concerns surrounding the development of the situation had already caused Wall Street to give ground Friday evening. The Dow Jones fell nearly 1.1% and the Nasdaq Composite ended down 1.3%.
The decline in Asian stocks on Monday only added to the uncertainty, as markets will not be able to hold on to developments on Wall Street, which will remain closed today for the Labor Day holiday. ‘.
The trend now seems to have become very unstable, as evidenced by the CBOE’s VIX volatility index, which is now well anchored above the 25 point mark.
Relatively optimistic last week following the announcement by the G7 countries of their desire to cap oil prices, investors are now cautious about the outcome of the crisis.
The return of certain investors to American Treasuries, which enjoy their status as a safe haven in times of crisis, is a good illustration of the markets’ reluctance.
The drop in bond prices is also on the agenda this Monday in Europe, 72 hours from a probable increase of 75 basis points in the key rate by the ECB.
Our OATs deteriorate by 5Pts to 2.200%, the Bunds show the same gap at 1.5720%, the Italian BTPs drop with +12Pts to 3.952%, the 4.000% are getting closer, the ‘spread’ worsens to almost + 240pts against the Bund).
No quotes of course on T-Bonds at W-Street.
Under these conditions, the participants will be very attentive to the economic indicators before the meeting of the ECB, which should raise its rates by at least 50 basis points at the end of its meeting on Thursday.
On Monday, operators focused in particular on the PMI activity indices in the European services sector, as well as on the latest retail sales figures in the euro zone.
The latter increased by 0.3% in the euro zone and in the EU, according to Eurostat. In June, it was down 1% in both areas compared to May.
The PMI S&P Global composite index signals a further contraction of -1Pt in overall activity in the euro zone, which, although remaining moderate, has worsened compared to the previous month: fall from 49.9 in July to 48 .9 in August.
In France, the PMI for ‘services’ fell to 51.2 but remained in expansion territory.
On company news, François Delattre, who had sat on the EDF board of directors since June 2019 and whose term of office would run until 2025, has decided to resign from his mandate as director, announced Friday the French electrician.
The succession of the boss of EDF, Mr JB Levy is still not settled, the candidates are not jostling to administer a state company where the real decision-maker will be the government.
Auto stocks are under attack with the new surge in gas prices: Valéo and Faurecia lose more than 7%, Renault and Stellantis more than -4.5%.
Sanofi announced on Monday that new data on Dupixent have demonstrated a “consistent” long-term safety and efficacy profile in pediatric asthma.
These results, from the extension phase of a phase III trial, show that the effect of the drug, administered as maintenance treatment and in combination with other antiasthmatics, remained homogeneous for a period of up to two years in children aged 6 to 11 years with moderate to severe asthma with type 2 inflammatory signature.