(New York) European stock markets fell under the weight of recession fears and Wall Street lacked direction.
Posted at 6:30am
Updated at 12:48 p.m
European indices ended the session in the red: Paris lost 0.90%, Frankfurt 1.73%, Milan 1.21%, while London limited the damage, falling 0.15%.
The New York Stock Exchange opened lower, hesitating not far from equilibrium throughout the session.
The Dow Jones index rose 0.27%. The tech-heavy NASDAQ fell 0.03% and the S&P 500 fell 0.07%.
“The specter of inflation is back and is driving away the last few economic optimists,” commented Andreas Lipkow from the Comdirect.
Maximilien Monot, portfolio manager of Monocle AM, noted “a form of wait-and-see attitude in the American market and a kind of fear of the development of the numbers” of the economy.
“Investors face two headwinds: the more aggressive Federal Reserve and the bearish market trend,” added 50 Park Investment’s Adam Sarhan, hoping that the company’s quarterly results approaching in the coming weeks would “bring good news.”
“If it doesn’t, then we need to prepare for more falls in the indices,” he underscored, as Wall Street looks set to wrap up one of its worst semesters since the mid-1970s on Thursday.
In the United States, gross domestic product (GDP) fell by an annualized 1.6% in the first quarter, slightly more than originally announced (-1.4% in April).
“The GDP revision is small, but it is important because it reflects slowing consumer spending growth,” said Chris Low of FHN Financial.
On the part of the central banks, the President of the European Central Bank, Christine Lagarde, admitted that monetary policy is “not a science” but “an element of art”. For his part, Fed Chair Jerome Powell said the US economy is in “good shape” and should weather the central bank’s monetary policy changes without slipping into recession.
In the bond market, long-dated government bond yields fell sharply, particularly in Europe, where the 10-year German Bund yield fell 10 basis points.
Degraded travel and real estate
Shares in the travel sector fell in the wake of the carnival (-14.18% in New York), punished by an unfavorable rating from Morgan Stanley analysts, according to Bloomberg.
In Paris, Air France-KLM lost 3.62% and Accor 4.89%. In London easyJet lost 6.10%, TUI 6.23% and Fraport 7.03% in Frankfurt. In New York, Royal Caribbean (-10.26%) or Norwegian Cruise (-9.33%) were also dragged down.
Real estate also suffered from a negative rating from Bank of America for the real estate sector with several downgrades. “Rent growth will disappear”, estimated this opinion, in particular because of “recessionary constraints”.
That forecast weighed on Unibail-Rodamco-Westfield, which lost 4.10%, but also weighed on Covivio (-6.49%) in Paris, British Land (-8.66%) and Land Securities (-6.54%) in London or Real Estate Colonial (-7.24%) in Madrid.
The Swiss franc is on par with the euro
The Swiss franc gained 0.80% against the euro and reached par with the European common currency for the first time since last March.
“The Swiss franc is a safe haven par excellence and often ahead of other markets, its rise does not bode well,” says Maximilien Monot of Monocle.
The dollar gained 0.82% against the euro to hit $1.0437, the European currency’s lowest level in two weeks.
Bitcoin lost 1.13% to $20,020.
On the raw material side
Oil closed lower in a market tickled by slowing US fuel consumption, while a Biden administration member said he was hoping for a fresh gesture from Saudi Arabia.
The price of a barrel of Brent North Sea oil for delivery in August fell 1.45% to close at $116.26.
A barrel of West Texas Intermediate (WTI), also due to expire in August, fell 1.77% to $109.78.