(New York) Western stock markets fell again on Wednesday, fearing that the weakness of economic activity in the world in recent months is added to the rise or persistence of inflation via commodity prices.
On Wall Street, the Dow Jones lost 0.57%, the NASDAQ index fell 1.06% and the broader index S
In Europe, the Paris Stock Exchange lost 0.84% at the close, weighed down by luxury, Frankfurt 0.19% and London 0.16%. Milan also fell, by 1.54%, heckled by its banks.
“Markets are pricing in the risk of stagflation,” that is, a situation where inflation is high but growth is weak, which “would be the marker of the economy,” describes Michael Nizard, multi-asset investment director of Edmond de Rothschild AM.
“The eye of the storm” is, according to him, “the price of raw materials”, in particular oil: after having increased all summer, prices were further supported by the announcements on Tuesday of the extension of the cuts made by Russia and Saudi Arabia.
The price of a barrel of Brent North Sea oil for November delivery rose 0.62% to close at $90.60, a new nearly 10-month high.
The barrel of American West Texas Intermediate (WTI), with maturity in October, appreciated by 0.98%, to 87.54 dollars, also at its highest since mid-November. This is the ninth positive session in a row for WTI.
This rise in oil prices raises fears of a resumption of inflation, or a slower decline than expected, particularly in Europe. This scenario has repercussions on “long rates”, which have risen, but also on the strength of the dollar for several weeks as well as on the equity markets, describes the manager.
A resurgence of inflation would encourage central banks to maintain their restrictive monetary policy, implemented since 2022, for many more months.
Even the good performance of the manufacturing sector in the United States according to the ISM indicator does not bring comfort to investors. “It raises concerns about persistent inflation” in particular, as the ISM index of prices paid is well above expectations, says Christophe Boucher, chief investment officer of ABN AMRO IS.
State interest rates rose further: the interest rate on the US 10-year bond rose to 4.28%, against 4.26% on Tuesday, and that of Germany rose to 2.66% against 2.61% on Tuesday.
Faced with these pessimistic visions over the next few months, the jump could paradoxically come from the lack of dynamism in China, which “could export the slowdown in its demand”, particularly in raw materials and thus lower oil prices, nuance Mr. Nizard .
According to the Wall Street Journal, authorities have banned employees of government agencies from using iPhones for work, or even, for owners of the Apple smartphone, from taking them to work. The directive would also affect other non-Chinese phone models.
The Cupertino company lost more than $100 billion in market capitalization in Wednesday’s session alone (-3.58%).
China’s “going after Apple has weighed on the market, because it’s the biggest capitalization,” explained Steve Sosnick of Interactive Brokers.
The world’s largest luxury goods company LVMH fell 3.64% in Paris, with its share price falling to its lowest level since January. The whole luxury sector is suffering with the statements of the owner of Richemont (-5.18%) Johann Rupert during the General Meeting of the company, stressing that inflation is affecting the demand for luxury goods in Europe, Bloomberg reported.
LVMH, which lost its rank of first European capitalization last week, is also affected by an HSBC rating, which maintained its recommendation, but sharply lowered its price target.
Shares of Kering (-2.31%) and Hermès (-1.86%) were also downgraded by the bank, but more slightly. Elsewhere, Burberry yielded 4.71%, Swatch 2.72%.
The US dollar was stabilizing against the euro after gains the previous day, at 1.0724 (0.03%) around 4:55 p.m. EST.
Bitcoin fell 0.15% to $25,666.