Difficult weekend return for the markets, the Cac 40 having fallen 2.74% to the low of the session to fall below the threshold of 6,400 points. It ended down a little less pronounced by 1.74%, to 6.455.81 points, in a high trade volume of 5.22 billion euros. Wall Street is not helping, also in the red since the opening. The Dow Jones gives up 1.55% and the Nasdaq Composite 2.02%
Distrust of risky assets has returned, fueled by fears of bankruptcy by Chinese real estate giant Evergrande, falling commodity prices and awaiting the US Federal Reserve’s monetary decision on Wednesday evening .
“It’s a chain effect”
If Chinese markets were closed on Monday and will remain closed on Tuesday, Evergrande stock has plunged more than 10% this morning in Hong Kong. In particular, the group must pay interest on two maturing bonds on Thursday. Beijing also warned banks last week that Evergrande might not be able to meet loan repayments.
” Evergrande is just the tip of the iceberg, warns Louis Tse, of Wealthy Securities in Hong Kong, the market fears that Beijing will increase pressure on listed developers to reduce property prices in mainland China and Hong Kong. It also affects banks. If house prices go down, what will happen to their home loans, he asks himself, it’s a chain effect “.
What about “dot plots”?
The US central bank is due to meet its Monetary Policy Committee (FOMC) on Tuesday and Wednesday. It should on this occasion lay the foundations for an upcoming reduction in its asset purchases, but the market does not expect an announcement on this point before November or December due to the poor employment figures for the month of August, during which only 325,000 jobs were created, about 500,000 less than expected.
The Fed’s monetary decision, along with the institution’s new economic projections, will be announced Wednesday at 8 p.m., before Jerome Powell’s traditional press conference. Beyond the central bank’s decision, it is the projections for the evolution of interest rates, the famous “dot plot”, which are the most anticipated. This dot chart anonymously illustrates the rate hike expectations of FOMC members. In June, the dot plot pointed to two rate hikes in 2023 and none in 2022.
Investors are also wondering about the agenda of Joe Biden’s infrastructure investment plan while monitoring the US debt ceiling, which could be reached in October, with the corollary of a possible shutdown of federal agencies, unless Congress votes for an extension in the meantime.
Sopra Steria has not taken any action after Atos
ArcelorMittal fell 8% as iron ore prices continue to plunge below $ 100 a tonne in Asia, a 60% drop from their record high. Banks have also seen red in the wake of fears related to Evergrande. BNP Paribas, Societe Generale and Agricultural credit lost 3.8% to 5.7%.
The automotive sector is not spared, like Renault and Stellantis, down 2.2% and 5.2% respectively. Beyond their cyclical nature, manufacturers have suffered from reports that the boss of Daimler’s heavy-duty division said he had observed an intensification of the semiconductor shortage in recent weeks.
Good news for Air France-KLM
Sopra Steria gave up 7%, not without falling more than 10% to the day’s low. According to BFM Business, the IT services company would be interested in Atos, which would constitute a big acquisition, Atos weighing 5 billion euros on the stock market despite its fall of nearly 40% since the beginning of the year, against 3.5 billion for Sopra Steria. The latter said in the afternoon that he had not taken any action with Atos.
Conversely, Air France-KLM took 5.3%. Vaccinated travelers from the UK and the European Union will again be allowed to travel to the US from November after an 18-month ban linked to the health crisis, reports the Financial Times citing sources familiar with the matter. The White House is expected to make an announcement on Monday, adds the daily.