(Paris) World stock markets fell sharply on Thursday, cashing in on economic statistics that reveal inflation still at a high level and a risk of economic slowdown in the United States.
Posted at 10:38 a.m.
The New York Stock Exchange opened lower: the Dow Jones yielded 1.68%, the NASDAQ 2.71% and the S&P 500 1.93% around 2:20 p.m.
The European indices remained in bright red and did not go far from the -3% mark: Paris fell by 2.60%, London by 2.65%, Frankfurt by 2.73% and Milan by 3.05%. Concerns about Russian gas deliveries added to the rest of investors’ fears.
The PCE index, which measures US inflation and is favored by the Federal Reserve, remained at a high level in May, at 6.3%. Over the month, inflation rose by 0.6%, slightly below analysts’ forecasts, which had forecast +0.7%.
In addition, household spending growth has slowed. If this slowdown in household consumption were to continue in June, it could weigh on gross domestic product in the second quarter, while consumption is the main driver of the American economy.
In France, price increases accelerated to 5.8% year on year in June. The indicator for the euro zone is expected on Friday.
This bright red session is like the semester it closes: catastrophic. The S&P 500 has lost more than 20% since the start of the year, the worst record since 1970, which “is largely explained by the fear of investors that the ongoing rate hikes” carried out by central banks to fight against inflation “do not end up leading to a recession”, say economists at Deutsche Bank.
Sovereign interest rates fell sharply again, particularly in Europe. The interest on the German 10-year loan stood at 1.38%, against 1.62% on Tuesday at the close.
On Wednesday, Fed Chairman Jerome Powell reiterated his belief that the US economy was in “good shape” and should weather the monetary shift without slipping into recession, which many analysts doubt. But the central bankers meeting at a seminar of the European Central Bank also reaffirmed that inflation would remain high for a long time.
Uniper appeals to the German state
The German energy company Uniper sank more than 16% after suspending its earnings forecast for the year, citing tensions over gas and in particular the drop in volumes sent to Germany by Gazprom. The company has entered into discussions with the German government on “stabilization measures”.
“In addition to market fears about the risk of recession, facing a new energy supply shock could be a tipping point” reinforcing the scenario of a stagflation of the economy or even worse, according to Stephen Innes, analyst at Spi Asset Management.
The Finnish Fortum, which owns Uniper, also fell by 5.67%.
Other energy companies, such as E. ON (-5.43%), or Engie (-4.85%) also fell sharply.
Road exit for Aston Martin
Luxury carmaker Aston Martin Lagonda fell nearly 18% as investors worried about news reports that the company was seeking new funding.
On the side of oil and currencies
Oil prices fell after the decision of the oil-producing countries of OPEC+ to renew their objective of opening the valves slightly more widely for this summer. However, this will not be enough to curb the surge in prices caused by the war in Ukraine.
The barrel of Brent North Sea expiring August fell by 1% to 115.10 dollars and that of WTI at the same maturity by 2.10% to 107.48 dollars around 2:10 p.m. GMT.
The euro fell 0.13% to 1.0429 dollars.
Other signs of investor risk aversion, bitcoin fell 6.53% to $18,900 and the Swiss franc, a safe haven, took 0.10% against the euro after climbing the day before to reach the parity with the single European currency and its highest level since January 2015.