CAC40: trend reversal after disappointing ISM (USA) – 03/03/2022 at 16:56

( – The Paris Stock Exchange reverses direction for the second time in a few hours, and this time down: CAC40 (-1.2%) has just lost over 130 pips at its high and is starting support at 6450 (new meaning). 6420, SBF120 falls below 5000), Eur-Stoxx50 is also flirting -1.5% below 3765, with Milan down -2.2% and Madrid down -3.8%.

A barrel of oil, which began to consolidate after its jump, this morning in London reached $119.8 (the London stock market fell -2% on Thursday, the Frankfurt -1.7%).

At the opening of Wall Street, US indices opened slightly higher: +0.4% on Nasdaq, +0.5% on S&P500, +0.6% on Dow Jones, but the polarity is reversed there too: S&P500 at -0.5% , Nasdaq at -1.1% after posting disappointing ISM on ‘services’.

The U.S. indices are holding up better because the United States is self-sufficient in gas and could be self-sufficient in oil by mobilizing all of its production tools, unlike Europe, which is highly dependent on its foreign suppliers).

Be careful not to lose sight of the whole context as Russian forces increase pressure on the Ukrainian front with the capture of the city of Kherson: Emmanuel Macron announces that it follows from his conversation with Vladimir Putin that the Russian leader seems to him very ‘determined’, despite sanctions, and that “the worst is yet to come.”

How much worse could things be? We can assume anything, such as lack of gas for industry, inflated fuel prices hurting consumption, hardship for companies in case of stagflation, etc.

And supporting growth “at any cost” (the “sustainability plan” when discussed with social partners) will only increase debt significantly.

Investors still seem to be betting on the possible success of talks between the two camps that could lead to a ceasefire, and a new meeting of Russian and Ukrainian emissaries was due to begin in the morning.

In terms of numbers, investors have just turned their attention to the ISM for “services” (growth in activity in the US services sector): it is below expectations in February with a decrease to 56.5 last month, from 59.9 in January, when economists expected growth up to 61.

The new orders component fell markedly to 56.1 from 61.7 in January, but the most worrisome decline is due to the employment sub-index, which fell from 52.3 to 48.0.5 and is now below the 50-point threshold, i.e. in the area of ​​contracture.

In its review, ISM notes that in addition to labor shortages, companies surveyed say they are struggling to meet demand due to supply and logistics issues, from merchandise to the reasons for this slowdown in the sector.

On the other hand, according to the Department of Labor, US nonfarm productivity rose 6.6% year-on-year in the fourth quarter of 2021, thus confirming on second reading its preliminary estimate made a month ago.

This recovery, in line with the consensus, reflects a 9.1% increase in manufacturing with only a 2.4% increase in hours worked. In addition, unit labor costs increased by only 0.9% due to a 7.5% jump in hourly wages.

US weekly jobless claims fell to 215,000 in the week of Feb. 21 from 233,000 (revised) a week earlier, a new all-time low.

Across the Atlantic, eurozone producer price growth accelerated again in January due to a fresh surge in energy prices (+30.6% yoy on the back of an 85.6% rise in energy prices). .

Producer prices in the 19 euro-using countries rose 5.2% mom, after +3% in December and +1.8% in November, according to data released Thursday by Eurostat.

Excluding energy, core inflation for the eurozone industry as a whole increased by just 2.2% in January… but that hurts the margins of manufacturing companies.

The IHS Markit Composite Overall Activity Index in France fell from 52.7 in January to 55.5 in February, following a slowdown caused by an increase in Covid-19 cases the previous month.

Although the growth in service provider activity was somewhat more pronounced than the growth in production among manufacturers, growth rates were nonetheless robust in each of the two sectors covered by the survey.

“Growth, however, continues to be threatened by significant downside risks, including inflation that is clearly on the rise,” warns Joe Hayes, senior economist at IHS Markit.

In the euro area, the region’s final ‘composite’ index of total private sector activity hit 55.5 in February from 52.3 in January, but that recovery was accompanied by a record rise in invoice prices, the final results of an IHS Markit survey show. purchasing managers.

On the currency side, the euro remains under pressure and fell 0.4% to $1.1065; in the bond market, the variable inflation appears to matter a lot as Bunds and OAT rise +5 points to 0.523% and 0.06% respectively, US Treasuries resist better with +1 point to 1.8720%.

In French company news, Thales (+5%) announces its intention to offer a 45% dividend increase to €2.56 on the occasion of the publication of a 45% adjusted group 2021 net income to €1.36 billion. euros, and EBIT increased by 32.1% to 1.65 billion.

TotalEnergies announces its participation in the $50 million Asia Rainforest Fund 2 (TAFF2) administered by New Forests, which aims to invest in certified plantation and primary forest conservation projects in Asia from the southeast.

Encouraged by quarterly reports, Technip Energie, which lost 40% in a month (from 14.8 to 8.8E), recovered +13.5% and returned to the 10E mark.

Finally, this Thursday, Societe Generale highlighted “limited” contact with Russia and said it was able to handle the fallout from a possible “extreme” scenario that would affect its holdings in the country. In a press release published this morning, the French establishment estimates its share in the Russian market at 1.7% of the group’s total share, i.e. 18.6 billion euros at the end of 2021, of which 15.4 billion is accounted for by its subsidiary. Rosbank.