Europe overtaken by inflation and economic concerns

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Paris (Reuters)-European stock markets fell on Tuesday, and Wall Street was also trading in the red in the middle of the session as new concerns about inflation and its economic and financial implications put pressure on the stock markets.

In Paris, CAC 40 finished at 6,253.14 points, down 1.66%. UK Footsey was down 0.36% and Germany Dax was down 1.8%.

The EuroStoxx 50 index lost 1.57%, FTS Eurofirst 300 0.96% and Stoxx 600 1.09%.

The first results of the S & P Global Survey show that growth in eurozone private sector activity slowed more than expected in May, with the “flash” composite PMI index dropping from 55.8 in April to 54.9. This is a high price and a shortage of raw materials.

In the UK, with the sharpest slowdown in activity since February 2021, some economists like S & P Globalmark Chris Williamson are now afraid of a recession and at the same time intensifying inflationary pressures.

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In Japan, manufacturing activity grew at the slowest pace in the three months to May, while in the United States, S & P Composite Flash PMI Global fell from 56.0 in April to 53.8, slowing in other countries as well. Will be.

According to the Chamber of Commerce Union DIHK, the deterioration of the business environment in French industry this month and inflation, which could reach 7% in Germany this year, also weighed on investor morale.

Signs of tension, also known as the “fear” index, which measures volatility, exceeded 30 points in the United States and Europe, and ended up at 28.61 points, 3.75%.

On wall street

At the closing price in Europe, the Dow Jones fell 1.42%, the Standard & Poor’s 500 fell 2.21% and the Nasdaq fell 3.38%. Snap warnings sent cold air to the index, especially the communications services compartment, down 5.06%.

Snapchat application owners, who plunged 41.1%, issued a “profit warning” on Monday night with second-quarter results because of “faster and more significant deterioration of the macroeconomic environment than expected,” according to the group. bottom. Since then, Alphabet, Twitter, Meta Platforms and Pinterest have dropped from 4.08% to 24.56%.

“If the (economic) outlook is bleak, advertising costs will be reduced,” said Lasmold, chief investment officer at AJ Bell.

Elsewhere in the technology compartment, it fell 2.74%, Airbnb fell 6.34% after announcing its withdrawal from China, while Tesla lost 5.75%. This is a penalty for Daiwa Capital’s lowering of automaker’s shipping forecasts this year.

Results and outlooks for Ralph Lauren (+ 0.52%) and Zoom Video Communications (+ 5.30%) are welcomed, and results and outlooks for Abercrombie & Fitch (-30.63%) are approved.

value

All major compartments of the European rating ended in the red, with community services (-2.07%), energy (-1.20%), and new technologies (-2.53%) blaming one of the biggest declines.

Engie and STMicroelectronics each decreased from 2.23% to 3.24%, but Publicis (-6.83%) was abandoned after being warned by Snap.

The so-called non-essential consumer goods and services sector (-1.69%), especially the luxury sub-compartments, also suffered from fear of a slowdown. Despite the latter announcement, Kering decreased by 1.78% and L’Oreal decreased by 1.69. That inflation has not yet affected the purchase of cosmetics.

In the aviation industry, Air France-KLM plunged 20.63% after announcing a € 2.25 billion capital increase. Meanwhile, Saffron lost 4.20% and Airbus lost 4.14% following reports that the joint venture CFM International was facing production delays.

On the plus side, Barclays Bank made a profit of 3.19% against the backdrop of the launch of a £ 1 billion share buyback program.

change point

In foreign exchange, the euro, which fell to a low of $ 1.0349 this month from January 2017, rose sharply (+ 0.37%), supported by the latest statement on the rate of increase by the ECB governor.

The dollar’s security is not enough to protect the dollar from a basket of reference currencies, and the greenback index (-0.23%) is a low of almost a month.

rate

New attention is focused on bond yields, with 10-year Treasury yields down 13 basis points to 2.7309% and Eurozone benchmark Germany equivalents down 7.3 points to 0.950%. I did.

Tom Digaroma, Director of Seaport Global Holdings, said:

oil

Oil prices have changed little, and investors are torn between expectations for China’s lifting of health regulations and fears of a recession.

Brent’s barrel rose 0.26% to $ 113.74, and US light crude oil (West Texas Intermediate, WTI) barrels fell 0.06% to $ 110.23.

Followed on Wednesday:

Minutes from the May Meeting of the Federal Reserve Board at 6 pm Greenwich Mean Time

(Report Claude Chendjou, edited by Sophie Louet)