(News Bulletin 247) – The Parisian index is moving sharply down and dropped more than 2% around 4:10 p.m. this Wednesday, weighed down by the decline in cyclical stocks and the current impasse on raising the debt ceiling of the United States.

The clock is ticking and anxiety is mounting for the markets. While the discussions never end to be at a standstill on the raising of the American debt ceiling, the Paris Stock Exchange is flinching.

The CAC 40 thus dropped 2.1% to 7,225.48 points around 4:10 p.m., and was at its lowest levels since the March 30 session. Wall Street is misguided. After dropping more than 1% on Tuesday night, the S&P 500 dropped 0.8% around 4:10 p.m. as well.

President Joe Biden’s teams sought Tuesday to advance in negotiations with the Republican camp but without success. Remember that the US Treasury estimates that the default of payment by the United States could occur as early as June 1. The Democratic executive has, moreover, ruled out resorting to a forced passage by invoking the 14th amendment to the Constitution.

Few good news

“In the absence of a real deal and the closer we get to June 1, the greater the fears of default become, given that the risk remains the highest since 2011 and is one of the most visible risks. which could certainly plunge the American economy,” said Stephen Innes of SPI Asset Management.

“If the deadline is not met, the economic damage could be severe, as payments representing around 10% of GDP could be interrupted. Market participants therefore have no choice but to embed risk additional depending on the day of the deadline, before the limit is finally raised,” he adds.

Especially since the market has hardly any good news to eat to allay its fears. It will just be waiting for the minutes of the Federal Reserve’s (Fed) last monetary policy meeting.

Saudi Arabia’s warning to oil traders

This pronounced decline in risk appetite is weighing down cyclical stocks, particularly the automobile compartment. The equipment manufacturers Faurecia and Valeo drop 6.5% and 3.6% respectively, while the manufacturers Stellantis and Renault lose 3.6% and 3.3%. Only one value of the CAC 40 swims in the green: Eurofins (+0.4%).

As for the smaller values, Chargeurs dropped 10.1% after reporting a sharp decline in its turnover in the first quarter, penalized by an unfavorable basis for comparison.

On the other hand, Compagnie des Alpes is holding up well against the trend, gaining 1.2% thanks to good half-year results driven by a resurgence in attendance at its ski resorts and leisure parks.

On the other markets, the euro dropped 0.2% against the dollar at 1.0753 dollars. Oil prices are carried by the warning from Saudi Arabia, the Saudi Minister of Energy having warned investors betting on a drop in prices. “I don’t have to show my cards, I’m not a poker player… but I would just tell them to be careful,” Abdelaziz bin Salman said, quoted by AFP. The North Sea Brent contract for July delivery is up 1.6% at $78.03 a barrel while WTI of the same maturity listed in New York is up 1.7% at $74.17 a barrel .