Paris: masterful counterpoint, but less violent than WStreet – 05/05/2022 at 20:02

( – After spending the day on a positive note, gaining as much as 2.5%, the Paris index plunged into the red around 5 p.m., before closing the session with a 0.43% loss, at 6,368 points, after suffering a drop of -200 Pts at the high of the day (in a straight line, without the slightest uptick, between 6,559 and 6,351): this is one of the most spectacular counterweights of the year…and it’s much worse on Wall Street.

Downward momentum is also blowing on the E-Stoxx50 (-0.9%) and Frankfurt (-0.6%) while London is limiting damage (+0.2%).

On the other side of the Atlantic, indices fell sharply, as it didn’t improve mid-session with down to -1,100 Pts on the Dow Jones (-3.3%), -3.7% on the S&P500 and -5, 2% on the Nasdaq Composite (less than Pts 12,300), after signing one of the strongest gains of the 21st century the day before the day of the Fed’s decision (+3% for the S&P500, +3.2%) for the Nasdaq Composite).

No improvement comes 2 hours before closing…we had to wait until 8:40pm the day before.

This morning, markets had welcomed in a somewhat unfettered (and inconsistent?) manner the claim that the FED would go no further than a half-point hike in key interest rates regardless of the inflation context, while some of Jerome Powell’s colleagues had said and supported a +75 basis points ‘shock strategy’.

Another change in monetary policy, the central bank has indicated it will begin reducing the size of its giant balance sheet by $47.5 billion starting next month, before moving to $90 billion, or 1%. of the outstanding amount, which amounts to nearly $9,000 billion today.

At his press conference, Jerome Powell, the institution’s chairman, assured Americans that the Fed would do everything possible to quickly bring inflation under control and set itself the goal of a “soft” landing for the economy, i.e. an ebb of inflation without the onset of recession.

But bond markets are skeptical to say the least: 10-year US Treasury yields rose rapidly from 2.92% around 8:40 PM to 2.965% this morning, then 3.04% this afternoon, the highest since 2018.

Also spectacular on our OATs (from -9pts to +2.5pts at 1.536%) and from -7pts on Bunds to +3pts at 1.011%.

With the Fed meeting over, investors learned, unsurprisingly, of the Bank of England’s decision to raise its key rate from 0.75% to 1.00% (also caught between runaway inflation and a deteriorating business outlook): this seems insufficient and the pound falls -2% against the dollar towards 1.237.

On the ‘macro’ front, figures for industrial production in France were on the agenda. In March, it fell in manufacturing (-0.3% after −0.9%) and in manufacturing as a whole (-0.5% after -1.2%), according to data adjusted for seasonal and working day variations ( CVS-CJO) from INSEE .

Production fell again in particular in means of transport (-2.8% after -1.5%): in the automotive industry it fell sharply (-7.3% after 5.4%) while it is stable in other means of transport (after +1.2%).

Production for the whole of the first quarter of 2022 was nevertheless higher than for the same period of the previous year in manufacturing (+1.2%) and in manufacturing as a whole (+0.3%).

There were also figures in the United States and in particular nonfarm productivity, which fell by -7.5% year-on-year in the United States in the first quarter of 2022, according to the preliminary estimate of the Department of Labor. decline much larger than expected by economists on average (-4%).

This decrease reflects a 2.4% decrease in production, while the number of hours worked increased by 5.5%. In combination with an increase in hourly wages of 3.2%, this leads to an increase in unit labor costs of 11.6%.

Weekly unemployment claims registered in the United States rose by +19,000 to 200,000 in the week of April 25, from 181,000 a week earlier, a 50-year low.

The four-week moving average stands at 188,000, up 8,000 from the previous week’s revised level.

Finally, in the week of April 18, the number of people receiving regular benefits was 1,384,000, down 19,000 from the previous week.

The dollar hasn’t suffered too much, holding steady for 24 hours towards $1,0530 (vs. 1.0640 on Wednesday night) and the real half-surprise of the day is the continuation of the oil surge to $112 in London (Brent), supporting Total Energies at +2.2%, leaving the CAC40 positive.

In the news of French companies, Societe Generale publishes net profit, the underlying group share increased by 21.3% to 1.57 billion euros for the first quarter of 2022, as well as the gross profit from the underlying business activities up 37.6% to 2.96 billion.

Crédit Agricole SA says it has opted for a ‘prudent’ provision with regard to its exposure to Russia and states in a press release that for the first three months of the year the net result, underlying group share, decreased by 19% to 756 million euros .

Legrand reveals that the group’s net profit share increased by 13.3% for the first quarter of 2022 to 258 million euros, despite an adjusted operating margin before acquisitions (in the 2021 perimeter) that decreased by one point to 20.6 % of the turnover.

Finally, Air France-KLM publishes a net result of -552 million euros for the first three months of the year, an improvement of 930 million over one year, as well as an operating profit of -350 million, but a positive EBITDA of 221 million.