(BFM Bourse) – Less pronounced than expected growth in services in the United States was enough to derail the CAC, while the New York indices temporarily put an end to their search for records. Oil is ebbing violently in the face of operators’ fears that the absence of an OPEC + agreement will mark the end of production quotas.
Hesitant and slightly bearish at midday pending the opening of Wall Street after a long weekend, the Parisian market barometer sharply increased its losses during the afternoon to finish declining by 0.91% to 6,507.26 points, a low at the close since June 1. In question: an indicator much worse than expected published at 4 p.m. across the Atlantic, plunging the main Wall Street indices into the red (-1% for the Dow and -0.6% for the S&P at 5:45 p.m., when the Nasdaq limits its decline to -0.2%). They are falling from the historic high they all three established on Friday – the S&P signing on this occasion its 7th consecutive record.
The indicator in question is that of the activity of the manufacturing sector in the United States. According to a survey carried out by the ISM (Institute for Supply Management) among purchasing managers from more than 400 companies in 20 manufacturing sectors, the PMI index (for “Purchasing Managers Index”) stood at 60.3 in June. This is a decrease of 3.9 points from the record level reached last month. It is also a figure well below the consensus of analysts who bet on 63.5. As a reminder, the threshold of 50 marks the limit between expansion and contraction of activity, so this means that demand has grown, but less quickly than expected. While this rate of expansion “remains solid”, “challenges related to material shortages, inflation, logistics and employment resources continue to hamper trading conditions,” said the president of ISM Anthony Nieves.
Investors will now shift their attention to the big meeting of the week, the publication of the “minutes” of the Fed’s monetary policy meeting in June. This report could rekindle speculation on the evolution of the pace of asset repurchases by the central bank, or even a possible rate hike.
On the bond market, the publication of the ISM activity in services triggered a sharp easing of the US 10-year yield, which fell to 1.36%, the lowest since February and sharply lower compared to the previous day’s close (1.42%). This resulted in a new sector rotation in favor of growth stocks.
Tech ‘s sought after, the neglected banking sector
In Paris, the largest increases of the day in the flagship index are thus for Dassault Systèmes (+ 1.9%) and Worldline (+ 1.8%). On the other hand, bank stocks are suffering from the fall in government bond rates, BNP Paribas and Societe Generale drop 3.2% and 3.1% respectively. Alstom however shows the most significant decline (-8.2%) after warning its investors that it would take three years to digest the takeover (completed at the end of January) of Canadian Bombardier Transport and warned that cash flow will be “significantly negative “over the entire 2021-2022 fiscal year. Renault (-5.4%) and ArcelorMittal (-5.1%) also fell.
Outside the ACC, EDF drops 6% while discussions get bogged down in Brussels on the group’s reorganization project, and the probability that they will succeed before the presidential election is now almost zero.
Virbac (+ 10.3%), for its part, dominates the SBF 120 ranking and climbs to an all-time high thanks to the second increase in its annual outlook. Driven by the dynamism of the market over the first six months, it now anticipates organic growth of between 10% and 14% in 2021, when it initially forecast an increase of between 3% and 5%. The supplier of the pharmaceutical industry Sartorius Stedim Biotech also raises its annual objectives and ends very close to its all-time high of March 2020 thanks to a gain of 5.4%.
Oil is ebbing, investors are worried about the consequences of “no deal”
Rising in the morning with the prospect of frozen production over the next few months following the lack of consensus among OPEC + member countries, oil prices turned violently in the aftermath. midday. “In the short term, (…) but if the agreement were to be broken, producers could be tempted to pump a lot more” explains Neil Wilson, analyst at Markets.com. What to cool the current enthusiasm of investors, especially since there is according to him “a risk that the respect of current production quotas decreases, and that the United Arab Emirates end up leaving OPEC and pumping in quantity”, adds he does. Under these fears, the price of a barrel of WTI folds and loose 2.93% to 73.12 dollars, when that of Brent gives up 3.12% to 74.74 dollars.
On the foreign exchange market, the single currency fell 0.45% to 1.1812 dollars around 6:20 p.m.
Quentin Soubranne – ©2021 BFM Bourse