Cac 40: IMF’s bleak outlook for world economy warps Paris Stock Exchange
(BFM-Börse) – The Paris rating has ended its uptrend, the cut in IMF forecasts of global growth has dashed any hope of a positive finish. Caution was the watchword at the meeting on the eve of expected Federal Reserve interest rate announcements, as traders took note of fresh corporate results.
The Paris Stock Exchange begins to fall again, reason for joy was the lack of subscribers. The CAC 40 slipped 0.42% to 6,211.45 points, the day after a slight gain of 0.3%.
Investors continue to digest the many corporate publications. In Paris, the increase in Dassault Systèmes’ annual ambitions was welcomed while the slowdown in Soitec’s quarterly activities was sanctioned. For its part, the CAC 40’s largest capitalization, LVMH, posted record first-half results… but after the close. This has therefore not yet had an impact on the index.
On Wall Street, Walmart has issued yet another warning about its results as the American distributor has taken the full brunt of changing consumer spending habits across the Atlantic due to rising prices.
Consumer confidence in the United States fell again in July for the third straight month. This deterioration in household economic sentiment highlights consumer concerns about continued price increases.
The Fed on Wednesday
Inflation will remain a concern on Wednesday when the US Federal Reserve raises interest rates for the fourth time this week in a bid to stem US inflation. It once again faces a balancing act with the difficult task of controlling price developments without plunging the country into a recession. A rise of 75 basis points (0.75 percentage points) is now expected by investors, especially since Christopher Waller, one of the Fed’s governors, and St. Louis Fed President James Bullard are two prominent members of the Fed who for an identical increase as in June.
The Federal Reserve’s decision on Wednesday will be followed by US GDP for the second quarter on Thursday, while the same indicator for the euro zone will be released on Friday along with the first inflation estimates for July.
For the International Monetary Fund (IMF), the economic skies are darkening and the organization is consequently lowering its forecast for global growth to 3.2% in 2022, from 3.6% last April. The likelihood of the United States escaping a recession is slim, said the chief economist at the IMF, who no longer expects growth of 2.3% on the other side of the Atlantic this year.
In Europe, where fears over Russian gas supplies are growing after Gazprom decided on Wednesday to drastically halt its gas supplies to Europe, citing a technical issue related to a turbine sent to Canada for maintenance. European Union energy ministers have finally agreed to cut their gas consumption to help Germany, which is heavily dependent on Russian blue gold.
The euro, for its part, fell 0.7% to $1.015, weighed down by fears of an economic recession in the old continent with the prospect of reduced gas supply.
Edenred has a ticket with the market, Soitec is struggling
On the stock side, Dassault Systèmes rose 0.8% after it again raised its earnings per share target for 2022 and is targeting a 14% rise in adjusted diluted earnings per share to 16%, or from 1.08 to 1 .10 euros compared to the previous 1.04 euros to 1.06 euros.
Edenred closed down 3.5% after posting the best half of its history. The group that issued the famous Ticket Restaurant saw their earnings skyrocket under the influence of inflation.
Walmart’s profit warning has rocked the entire European retail industry. Carrefour limited the break by losing just 0.7%. Casino Guichard (-5.35%), Fnac Darty (-4.9%) and Maisons du Monde (-6.5%) were not spared from investors’ distrust of a very inflation-sensitive sector.
Soitec stretched losses to 8.15%, the semiconductor materials maker showing a sharp slowdown in growth in the first quarter of its shaky fiscal 2022-2023 after two production incidents at its Bernin site near Grenoble.
Eutelsat continues to plunge 18.2% in the day after a 17.8% drop (already!). Investors are still skeptical about the planned merger of the French group with OneWeb in the spatial internet.
Sabrina Sadgui – ©2022 BFM Stock Exchange