Stock markets fell after the announcement of better than expected employment figures in the United States, this dynamism raising fears that the American central bank will raise its rates further sharply to fight against inflation.
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European stock markets ended in the red, after hovering around equilibrium for a long time. Paris lost 0.63% and Frankfurt 0.65%. Milan fell by 0.26% and London by 0.11%. European markets, however, maintained gains throughout the week. On the other side of the Atlantic, the New York Stock Exchange also fell around 4:00 p.m. GMT: the Dow Jones lost 0.30%, the broader S&P 500 index 0.63% and the Nasdaq, with strong technological coloring, 1 .02%.
Consolidation of rate tightening
The employment market rose sharply in July in the United States, reflecting the unexpected dynamism of the American economy which risks, in the eyes of the markets, confirming the American central bank (Fed) in its policy of sharply increasing its key rates to fight against overheating prices. The unemployment rate fell 0.1 points and fell to 3.5%, returning to its pre-pandemic level, which was the lowest in 50 years, the Labor Department said on Friday. “This is very good economic news that was rather badly taken by the markets, while investors had become used to the idea of an imminent easing of the Fed’s monetary tightening policyexplains Frédéric Rollin, investment specialist at Pictet.
In July, 528,000 jobs were created, i.e. “double the consensus” established upstream, underlines for his part Alexandre Baradez, analyst of IG France according to whom “even in normal times (these figures) would be excellent, especially as they arrive in an already extremely tight labor market, favoring the prospect of wage increases“. “The change in Fed policy expected by the markets becomes all the more difficult to justify», develops Frédéric Rollin, «in a strong labor market where rising wages risk fueling persistent inflation“.
The reaction of the equity market, initially epidermal, has subsided since 12:30 GMT. The bond market bore the scars of renewed investor concern more clearly, particularly with regard to the US two-year yield. It rose sharply to 3.24% around 4:00 p.m. GMT (+19.7 basis points), indicating that investors are now anticipating sharp increases in the Fed’s key rates. “Report staves off fears of recession but puts back fears of monetary tighteningin the foreground, observes Alexandre Baradez, analyst for IG France.
The dollar rose against other currencies around 4:00 p.m. GMT. The euro thus lost 0.72% to 1.0172 dollars and the pound 0.79% to 1.2065 dollars. Down more than 8% since the start of the week, oil prices started to rise again around 4:00 p.m. GMT. A good omen for inflation, the price of a US barrel of WTI was still below the 90 dollar mark, at its level before the Russian invasion of Ukraine. Around 4:00 p.m. GMT, the barrel of Brent from the North Sea, for delivery in October, took 1.72% to 95.72 dollars and that of American West Texas Intermediate (WTI) for delivery in September rose by 1.60% to $89.98.
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There “technology» suffers from rising interest rates
Meta (Facebook) lost 2.18% around 4:00 p.m. GMT in New York after announcing its intention to launch a loan and to have, for the first time in its history, resorted to debt to develop. Beyond the corporate news, the tech trend around the world was clearly down. Teleperformance, the French outsourced customer service giant, finished at the bottom of the CAC 40 at -6.25%. Swedish giant Spotify lost 4.10% on Wall Street and Deliveroo fell 4.20% in London.
The ad at the bottom of the poster
The British advertising giant WPP fell 6.63% in London around 1:50 p.m. GMT, after announcing a small increase in net profit of 2%, but margins fell in the first half. In its wake, Publicis fell by 3.84%, JCDecaux by 2.10% in Paris. In Frankfurt, Stroeer SE & Co lost 3.84%.
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On the side of cryptocurrencies
Bitcoin took 2.26% to 23,021 dollars around 4:00 p.m. GMT.
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