The Palais Brongniart, former headquarters of the Paris Stock Exchange. (Image credit: Adobe Stock)
(CercleFinance.com) – Markets are reacting negatively to what is believed to be very resilient US jobs (+528k) and the Paris Stock Exchange accelerates its decline towards 6455, ie -0.9%, reducing the weekly gain to a token gain of +0.1%.
The Euro-Stoxx50 fell -1% (3,720), taking last week’s gain to +0.6%. On Wall Street, the Dow Jones is likely to fall -0.8%, the S&P500 -1.2% and the Nasdaq more than 1.5%.
The dollar rose +0.9% against the euro towards 1.014 and +1.1% against the pound (the UK is expected to remain weak for 4th May according to the BoE, which forecasts a negative GDP of -1.5% in 2023). quarters into a recession).
The monthly U.S. jobs report said the U.S. economy generated 528,000 nonfarm payroll jobs in July (372,000 in June), a figure well above the consensus of +250,000, and the unemployment rate fell 0.1 point, according to the Labor Department to 3.5% return to its pre-Covid level, early February 2020.
The labor force participation rate was 62.1%, still 1.3 points below February 2020 levels, and the average hourly wage increased to an annual rate of 5.2%.
In addition, job creation for the two previous months has been revised from 384k to 386k for May and from 372k to 398k for June, ie a revised balance of +28k in total for these two months.
The labor market therefore remains one of the last major drivers of the US economy to hold its ground, with job creation remaining solid and the unemployment rate remaining at very low levels, reflecting a situation of full employment.
The prospect of the Federal Reserve multiplying rate hikes is growing and bond markets react negatively: T-Bonds tighten +12.5 points towards 2.80%, erasing the week’s gains.
According to CME Group’s FedWatch Barometer, the market estimates a 65% chance of a 50 basis point Fed hike next month and a 40% chance of a quarter point hike.
In Europe, our OATs and Bunds recovered +6 points to 1.415 and 0.864% respectively, BTPs only posted +2 points to 2.85% (“spread” versus the Bund reduced to only +200 points).
Investors were able to learn this morning about an increase in production in June 2022 in manufacturing in France (+1.2% after +1%) and in total industry (+1.4% after +0.2%), data adjusted for seasonal variations and working days (CVS-CJO).
INSEE, which publishes these figures, indicates that production is picking up again in capital goods (+3.5%) and transport equipment (+2.8%) and in extractive industries, energy, water (+2.4%) and in food industry recovered (+2.2%).
In the manufacturing sector, production in the second quarter of 2022 is higher than in the same quarter of 2021 (+2%). For industry as a whole, the increase was much more moderate (+0.2%) due to the drop in energy production.
France’s current balance of payments deteriorated sharply in the second quarter, mainly due to higher energy bills, data released by the Banque de France showed.
The current account deficit for the quarter was 8.6 billion euros, according to CVS-CJO data, a 7.5 billion euro deterioration compared to a first quarter that already showed a deficit (-1.1 billion).
In addition, France’s trade balance for June showed a deficit of nearly 13.1 billion euros, compared with a deficit of 12.9 billion in the previous month, according to Customs Administration CVS data CJO.
As the earnings season draws to a close, a number of European heavyweights are also set to report their quarterly results today, including German insurance giant Allianz.
In securities news, Rothschild & Co reports that the group’s net profit for the first six months of the year has fallen by 28% to 249 million euros.
Maurel & Prom reports net income of $138 million for the first half of 2022, more than quadrupling year-on-year ($32 million a year earlier) and gross operating surplus of $250 million, up 113%.
Finally, Sanofi announces the establishment of a collaboration with Innovent Biologics, a laboratory widely practiced in China, aimed at bringing innovative medicines to patients with difficult-to-treat cancers in that country.