The Paris Stock Exchange closed down sharply by 1.07% on Friday, dragged down by a mixed US employment report, which raised questions among the markets about the health of the world’s leading economic power.
The leading CAC 40 index fell 79.66 points, settling at 7,352.30 points, at the end of a session of mixed trading. Over the week, the CAC 40 fell by 3.65%.
Highly anticipated throughout the week, the publication of the US employment report ultimately “did not provide any clarification”, comments Amélie Derambure, multi-asset manager at Amundi.
In detail, the unemployment rate, as expected, fell slightly in August in the United States, to 4.2% against 4.3% in July, according to the American Department of Labor.
In addition, 142,000 jobs were created in both the private and public sectors, which is more than the 114,000 in July, but less than expected.
This report is thus “not bad enough to support the recession scenario, but it is also not good enough to dispel doubts about the extent of the slowdown in the American economy”, summarizes Amélie Derambure.
So, “everyone can see this report however they want: the optimists will say that we are returning to pre-covid levels and that this is only a normalization, and the more pessimistic will see it as the start of a darker trend for the American economy,” explains Amélie Derambure.
Investors now believe that it is as likely “that the Fed will start its rate-cutting cycle with 50 basis points as with a 25 basis-point cut,” Edmond de Rothschild analysts comment in a note.
However, this scenario of a larger decline would mean “that the battle against inflation has been won but that growth is under attack”, summarises Amélie Derambure.
Read more
Volatility on the markets was also fueled by statements from American central bankers. Christopher Waller, a member of the Fed’s Board of Governors, notably declared himself “open-minded about the extent and pace of rate cuts” by the American monetary institution.
On the bond market, the interest rate on 10-year French loans stood at 2.87% compared to 2.91% at the close on Thursday.
Problem with an Airbus engine
The setbacks continue for Airbus A350 aircraft with “a potential problem” on a second type of engine announced by the airline Malaysia Airlines, but the European regulator does not consider it necessary to extend inspections “at this stage”.
Airbus fell 2.58% to 128.34 euros.
Elis wants to get bigger
Shares in industrial laundry group Elis fell more than 15 percent to 19.50 euros after the French company said it had approached U.S.-based Vestis, a supplier of uniforms and workwear, with a view to a potential acquisition.
“There is no guarantee that these discussions will result in the signing of a transaction or other agreement,” Elis said in a press release, adding that “any transaction, if it were to be concluded, would be in accordance with Elis’ commitments to its shareholders,” including that of “financial discipline” regarding the “amount paid for the acquisition.”
Euronext CAC40
mgi/kd/as
