With a Cac 40 index down 0.5% to 7,958.3 points this Tuesday morning, the Paris Stock Exchange is weakened by considerations about the American economy and by the decline of TotalEnergies (-1.9%), including the stock hits a two-month low of $64.6, tracking oil’s swings.
Following a 3% fall, August futures on Brent are trading around $77.6 per barrel, the lowest since February. Contrary to observers’ hopes of seeing OPEC+ extend its voluntary oil production cuts of 2.2 million barrels per day until the end of the year, the organization and its allies have decided that these would be gradually eliminated from October until September 2025. It remains to be seen whether the market will be able to absorb this additional supply, particularly if the economic outlook turns out to be weaker than expected. A consideration that OPEC+ is ready to take into account since it has clearly indicated that the addition of barrels to the market can be stopped if conditions do not allow it.
Several statistics, without necessarily being bad, have recently disappointed in the United States. This was again the case on Monday with the new contraction, stronger than expected, of the ISM manufacturing index in April. The slowdown in the world’s leading economic power is causing concern on the markets because, at the same time, inflation has not declined, or barely, for several months. A divergent trend between the economy and prices which, if it continues, could complicate the task of the Federal Reserve on the direction of its monetary policy. “The economic dynamic has become less strong, inflation is not making much progress, the American consumer is showing weak signs of fatigue (…) The probability that data below the consensus persist seems higher to me because politics restrictive monetary policy has more effects on the economy. I don’t see a reacceleration of the economy, savings rates are no longer there, real wages are growing a little slower, employment reports show a small deterioration…, declared Alexandre Baradez, analyst at IG. Inflation will have to decelerate more quickly because if inflation crystallizes in the current zone and the economy begins to slow down, it is less good for the market. »
American futures fell slightly after Wall Street closed in disorganized order, from -0.3% for the Dow Jones to +0.6% for the Nasdaq Composite while, on the bond side, American yields fell to their lowest levels in two weeks.
Jolts, the only statistic that will count this Tuesday
Investors will closely follow upcoming US data, such as crucial employment figures on Friday, for more clues about the prospects for the world’s largest economy and its central bank. This afternoon at 4 p.m., the Bureau of Labor Statistics (BLS) will release the number of April job vacancies from its Job Openings and Labor Turnover Survey (Jolts). According to the Bloomberg consensus, they should amount to 8.36 million, a decrease of 128,000 compared to March. “ Signals are improving on the job market. We have a normalization that has taken place on the Jolts figures for vacant jobs. Maybe the Fed will want to make sure the market really eases, but I think you shouldn’t aim much lower than 8 million for the current trend. Compared to the peak of 12 million during the Covid crisis, the tension has decreased by around 4 million jobs “, declared Alexandre Baradez.
In terms of values, Klépierre gains 1.6% following Citi’s increase from “sell” to “buy”.
