Europe ends in red after FedEx, IMF and World Bank warnings – 09/16/2022 at 18:28
A dealer works at the Frankfurt Stock Exchange
By Claude Chendjou
PARIS (Reuters) – European inventory markets edged decrease on Friday and Wall Street was additionally in the red in the mid-session amid danger aversion linked to “revenue warnings” from FedEx, American Logistics and supply big Parcel. International Monetary Fund (IMF) and World Bank (WB) on the evolution of worldwide financial scenario.
In Paris, the CAC 40 ended down 1.31% at 6,077.3 factors. The British FTSE misplaced 0.62% and the German DAX misplaced 1.66%.
The EuroStoxx 50 index fell 1.17%, the FTSEurofirst 300 1.61% and the Stoxx 600 1.58%.
Over the week, the Paris index fell 2.17% and the pan-European Stoxx 600 fell 2.35%.
The WB on Thursday night estimated that simultaneous rate of interest hikes by central banks in the face of persistent inflation may favor a world recession subsequent yr, and the IMF stated it expects a deeper financial slowdown in the third quarter.
It is in this unfavorable financial context that FedEx introduced on Thursday that it will cancel its annual monetary forecast whereas the American group is taken into account a dependable barometer of the worldwide economic system.
The predictions come as traders already set their sights on the US Federal Reserve’s (Fed) financial coverage assembly scheduled for Wednesday. A 75 foundation level rate of interest hike is extensively anticipated by the market.
In the euro zone, whereas August inflation was confirmed at 9.1% over a yr, an unprecedented degree for the reason that creation of the only foreign money, European Central Bank (ECB) Vice-President Luis de Guindos emphasised on Friday. Rate hikes proceed regardless of recession dangers.
The danger has elevated in the UK, with retail gross sales figures displaying a sharper-than-anticipated fall in August.
The solely constructive information of the day got here from China, the place manufacturing and retail gross sales rose stronger than anticipated in August.
In an indication of concern in the market, the volatility index reached a two-month excessive of 28.45 factors in the United States, whereas in Europe it ended at 26, 43 factors by 4.27%.
Values in Europe
FedEx’s warning logically weighed on its European opponents: German group Deutsche Post fell 6.58%, British Royal Mail 8.08%, Swiss Kuehn & Nagel 4.09% and Dutch DSV Panalpina fell 6.19%.
The European air transport sector (-2.46%) was hacked by the regulators’ strike in France: Air France-KLM fell 4.77%, ADP 2.43% and easyJet 3.62%.
Elsewhere, Uniper fell 1.74%, after a German authorities draft seen by Reuters confirmed the struggling group was unlikely to obtain support till October 31.
In Italy, Banca Monte dei Paschi di Siena fell 5.07% after shareholders accredited a capital improve plan.
On Wall Street
At the shut in Europe, the Dow Jones was down 0.86%, the S&P 500 was down 1.10% and the Nasdaq was down 1.38%.
All main compartments of the S&P-500 are in the red, with the Industrials sector (-2.21%) displaying the largest decline.
In the wake of FedEx’s announcement, which fell 23.20%, the Dow Jones Transportation Index fell 5.11%, its lowest since February 2021.
Courier and logistics teams UPS and XPO Logistics gained 4.42% and 6.78%, respectively. Amazon fell 2.62%. Airlines Southwest Airlines and JetBlue misplaced 4.59% and 1.85%, respectively.
In overseas change, the greenback is steady in opposition to different main currencies and ought to finish your complete week in constructive territory because of the sharp rise anticipated in the US subsequent Wednesday.
The euro, up 0.09% to $1.0008, rose simply above parity with the buck.
The pound sterling, weighed down by retail gross sales figures in the United Kingdom, fell to a brand new 37-yr low of $1.1351 in opposition to the American foreign money.
Bond yields in Europe have been as soon as once more larger, supported by latest statements by ECB president and vice-president Christine Lagarde and Luis de Guindos, respectively, on the necessity to prioritize the battle in opposition to inflation regardless of recession dangers.
The two-yr German bund hit 1.62%, the best in a session since 2011, and pared its closing positive aspects to 1.549% (+4.7 factors). It rose almost three factors to 1.764%, the best since mid-June, after rising 1.817% in the ten-yr session.
In the US, the ten-yr Treasury bond yield fell barely to three.451%, however the two-yr rose greater than a degree to three.886%.
Oil costs are rebounding after their sharp decline in the earlier session, however ought to present their third consecutive weekly decline for the total week, primarily attributable to demand fears.
Brent rose 1.14% to $91.88 a barrel and US gentle crude (West Texas Intermediate, WTI) added 0.87% to $85.84.
(Written by Claude Chendjou, edited by Sophie Luet)