The Paris Bourse fell sharply at the start of the high-risk week, notably with the setbacks of Chinese Evergrande, the fall in commodity prices and the monetary decision of the US Federal Reserve. Investors are also questioning the agenda of Joe Biden’s infrastructure investment plan while watching for the debt ceiling, which could be reached sometime in October, unless Congress votes for an extension in the meantime. . In an editorial published by the Wall Street JournalJanet Yellen called on parliamentarians to raise or suspend the debt ceiling in order to avoid a ” disaster economic “.
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, dragging the financial sector in its wake as the Chinese real estate giant risks defaulting. on his debt. In particular, he must pay the 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, with the market fearing that Beijing will increase pressure on listed developers to cut property prices in mainland China and Hong Kong. It also affects banks, if house prices go down, what will happen to their mortgage loans, he asks himself, it’s a chain effect “.
Around noon, the Cac 40 fell 2.12% to 6,430.62 points, its first passage below the threshold of 6,500 since July 22, in a relatively strong business volume of 1.47 billion euros. At European level, the 19 Stoxx 600 sector indices are in the red, starting with those of basic resources (-5%), automotive (-3.3%), banks (-3.1%) and insurance (-3%). The contracts futures December on American indices yielded between 0.8% and 1.7%. On Friday, the S&P 500 was down nearly 2% in September, its biggest monthly decline this year.
Tapering and “dot plot” in the Fed debates
The US central bank is due to meet its Monetary Policy Committee (FOMC) on Tuesday and Wednesday. On this occasion, it should begin the process of reducing 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 August, during of which only 325,000 jobs were created, about 500,000 less than expected.
The monetary decision, accompanied by new economic projections, will be announced Wednesday evening, before Jerome Powell’s press conference. Beyond the central bank’s decision, it is the projections for the evolution of interest rates that 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.
The Bank of Japan will also announce, Wednesday, its monetary decision, which will be followed, Thursday, by that of the Bank of England.
Sopra Steria weighed down by its supposed interest in Atos
ArcelorMittal 6.7% drop as iron ore prices continue to plunge below $ 100 per tonne in Asia, a 60% drop from their record high.
Sensitive to the Chinese economy, LVMH, Kering and Hermes lose more than 2%. ” Any bad news from China is negatively impacting luxury values », Says Luca Solca, analyst at Bernstein, interviewed by Bloomberg.
The automotive sector is not spared, like Renault and Stellantis, down 3.5% and 5% respectively, following press reports that the boss of Daimler’s heavyweight division said he had observed an intensification of the semiconductor shortage in recent weeks.
Banks are also under pressure, BNP Paribas, Agricultural credit and Societe Generale yielding between 4% and 5.9% in the wake of the financial sector in Hong and Europe.
Atos, who left the Cac 40 index, resists. SSII interests Thales (-1.8%) or Sopra Steria (-8.9%), although neither group has approached it at this stage, reports BFM Business. Thales has denied being interested, according to Bloomberg.