Did you say “October”? At the mention of the name of the tenth month of the year, many investors tend to hang their heads remembering the dark months of October that have marked stock market history, including the crashes of 1929 and 1987, although from a fundamental point of course, September is the worst month on the stock market for the S&P 500, and by extension for the CAC 40.
Friday’s improvement (+1.51% for the Parisian index) almost made a psitt. In fact, the session got off to a bad start, bedroom 40 touching a low of 5,654.44 points (-1.88%) around 10 am, before starting a slow rise and then returning to positive territory thanks to the support of Wall Street, where the dow jones (+2.1%) and the Nasdaq Composite (+1.5%) raise their heads after two sessions of strong declines. At the close, the flagship index of the Paris Stock Exchange gained half a point, to 5,794.15 points, in a transaction volume of 3,000 million euros.
Credit Suisse risk
However, investors remain alert to the accumulation of risks, ranging from inflation to recession, through the rise in interest rates, the British crisis and Credit Suisse’s stumbles. ” We spent the weekend wondering whether or not Credit Suisse would ultimately fail. And bank executives spent the weekend trying to reassure investors that the bank has strong capital and liquidity to avoid a slide. summarizes Ipek Ozkardeskaya, senior analyst at Swissquote Bank. His effort did not pay off: the title swiss credit It trades at less than 4 Swiss francs, while CDS (credit default swaps) have skyrocketed. These derivative products intended to hedge against the risk of their issuer defaulting have gone from about 60 basis points at the beginning of the year to 250 basis points, which means that the market is very clearly anticipating a default by one of the largest Swiss banks. . It will present its restructuring plan on October 27. Can Credit Suisse go bankrupt? “ Yes, it is possible, but it is highly unlikely.answers Ipek Ozkardeskaya. Credit Suisse is certainly “too big to fail” [trop gros pour faire faillite, ndrl]. What could happen is a Christmas miracle and the new CEO of the bank will strengthen the bank’s loins within 100 days, as he promised himself, and the establishment will prosper until the next scandal. Or it becomes a good takeover target and gets gobbled up by another bank. Or that it be saved by the Swiss authorities. »
Further north in Europe, the UK is also sinking into crisis. The “honeymoon” between the population and the new Prime Minister Liz Truss will have been particularly short, if not non-existent… Her “growth plan”, drawn up with Chancellor of the Exchequer Kwasi Kwarteng, foreseeing massive tax cuts, has set the pound on fire, causing it to tip over near parity with the dollar. Drawing lessons from this episode, the Finance Minister announced on Twitter on Monday the withdrawal of his plan to abolish the top bracket of income tax.
We get it, and we’ve heard it. https://t.co/lOfwHTUo76>pic.twitter.com/lOfwHTUo76
— Kwasi Kwarteng (@KwasiKwarteng)https://twitter.com/KwasiKwarteng/status/1576820620293468160?ref_src=twsrc%5Etfw>October 3, 2022
A little under the 50 threshold
This allows the pound to regain ground, but only marginally appeases traders who have many other concerns, inflation and recession first and foremost. Published during the morning, the manufacturing PMI established by S&P Global for the euro zone stood at 48.4 points in September, the lowest in 27 months, compared to 48.5 in the first estimate and 49.6 in August, sinking further below the critical threshold of 50 that separates activity growth and contraction. ” The pernicious combination of a receding manufacturing sector and accelerating inflation highlighted by the latest PMI data is further weakening the eurozone economy. Excluding the months of lockdown imposed during the health crisis, euro zone manufacturing output and demand had not shown declines of this magnitude since the height of the global financial crisis in early 2009. said Chris Williamson, chief economist at S&P Global.
An aggravating factor, oil rises again -the barrel of Brent rises 3.4% to 88.1 dollars-, in reaction to the press releases prepared by OPEC + delegates to discuss a reduction of more than 1 million barrels per day of its production in order to support the prices of black gold, which have fallen by more than 30% since the peak of last March, after the invasion of Ukraine by the Russia. That would be the biggest drop since 2020.
Among the other stocks, the tech sub ended in decline, capgemini, Dassault Systems Y worldline yielding between 0.4% and 0.54%. Finally, Air France-KLM fell 4.5% after HSBC downgraded its rating from ‘buy’ to ‘hold’.
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