European stock markets were down on Monday, weighed down by decent economic indicators, while the rest of the market went on the defensive ahead of the US Federal Reserve’s (Fed) monetary policy meeting.
As of 10:30 GMT, Paris was down 1.37%, Frankfurt was down 0.63% and Milan was down 0.93%. The European reference index Eurostoxx 50 returned 1.54%. In Switzerland, the leading index SMI lost 0.83%.
London is closed for a public holiday, as are Hong Kong and Shanghai, reducing volumes and exacerbating volatility.
A little earlier, just before 08:00 GMT, European stock markets experienced a sudden and spontaneous drop. The Paris CAC 40 index fell 3.4%, the Eurostoxx 50 fell 2.9% and in Stockholm the OMX 30 index fell as much as 8%, according to Bloomberg, which claims that the operator in charge of the Swedish course movement examined.
The reason for these fluctuations is unclear to some analysts, who even speak of a “flash crack” on Twitter.
For Andrea Tuéni, analyst at Saxo Bank, the release of manufacturing growth at its lowest since January 2021 in the euro zone in April (S&P Global PMI Composite Index) is the only significant indicator for the markets on Monday.
The report “highlights supply tensions,” particularly due to China’s lockdown, and the clouded demand outlook, showing that “euro-zone manufacturing is going through a somewhat complicated period,” he told AFP.
Andrea Tuéni adds that “these figures reflect those published in China”: manufacturing activity there fell in April to its lowest level since February 2020 due to the restrictions in the country’s major cities.
Sanitary measures are not being eased, and in Beijing authorities announced on Saturday they would be stepping up by making new tests mandatory for access to certain public places.
Tokyo closed down 0.11% and held ahead of the Fed meeting before closing three days for Japan’s ‘Golden Week’.
However, Monday morning’s move should be seen in the context of the high volatility that has been driving markets for several weeks, with stock indices reacting strongly to the slightest news about the situation in China, inflation, the geopolitical context and monetary policy.
The New York Stock Exchange posted sharp losses on Friday. The Nasdaq notably plunged more than 4% — and more than 13% in April — its worst drop since 2008, while the S&P 500 and Dow Jones had their worst month since March 2020. Their futures showed that all three indices edged up slightly from the open.
Oil prices were impacted by fears over Chinese demand and by the 6th package of sanctions prepared by the European Commission against Russia’s oil ecosystem.
At around 10:25 GMT, a barrel of North Sea Brent for delivery in July, the first day of trading as the benchmark contract, fell 2.59% to $104.37.
The barrel of American West Texas Intermediate (WTI) for delivery in June fell 2.95% to $101.61.
Investors are also keeping an eye on the Fed’s policy meeting on Tuesday and Wednesday.
After raising interest rates by 0.25 percentage points in March, the Fed is set to ratify a surprise hike of half a percentage point this time, and is also expected to start trimming its balance sheet to combat inflation in the United States at its highest level since 40 years.
Car and technology punished
Sectors dependent on economic growth fell on Monday, such as autos, with Stellantis down 2.14%, Renault 1.38% and BMW 1.08%.
The technology sector declined due to rising lending rates. STMicroelectronics returned 3.22%, Dassault Systèmes 2.19% and Infineon 2.46%.
On the side of euro and bitcoin
The euro lost 0.21% to $1.0523, a historically low level.
Bitcoin gained 1.23% to $38,790.
This article was published automatically. Sources: ats/awp/afp