(News Bulletin 247) – The Paris Stock Exchange should extend its downward movement on Friday morning, investors being careful not to take too many risks before the publication of PMI surveys in the euro zone.

Around 8:15 a.m., the ‘future’ contract on the CAC 40 – July delivery – dropped 32.5 points to 7184.5 points, again suggesting a start to the session in the red.

The Parisian index is thus heading for a fifth consecutive session of decline in a market still in the fog as to the moment that the Fed and the ECB will choose to end their monetary tightening.

Over the week as a whole, the CAC is at this stage down by around 2.5% and is now threatening to sink the symbolic threshold of 7,200 points that it had managed to regain at the beginning of the month.

The episode of central banks over, economic issues will come back to the fore today with the publication, in the morning, of the flash PMI activity indices for the month of June.

These indicators should confirm the significant disparity that exists between the dynamism of the services sector and the weakness of the manufacturing sector, a contrast that does not bode well for growth.

Since the start of the year, the confidence differential of European purchasing managers between services and industry has continued to diverge, now reaching an unprecedented gap of 10 points.

From the point of view of economists, this confidence gap between the two sectors is not sustainable.

“There is reason to fear that the adjustment will be made above all by the weakening of services,” analysts at Oddo BHF recently warned.

By lining up two consecutive quarters of GDP contraction in the fourth quarter of 2022 and then in the first quarter of 2023, the euro zone has entered a technical recession.

And while a rebound is expected in the second quarter, investors are well aware that the mounting negative effects of monetary tightening should then cause growth to fall again.

The American economy is also under the threat of a recession in the face of fears that the repeated increases in interest rates decided by the Fed will penalize activity.

The Conference Board, a New York-based employers’ organization, warned yesterday that it forecast a recessionary episode in the United States between the third quarter of 2023 and the first quarter of 2024.

The US PMI for the services sector, due in the afternoon, should nevertheless confirm the good health of the services sector, thanks to the strength of technology and the boom in artificial intelligence.

Yesterday, the Nasdaq Composite had managed to win more than 0.9%, which should enable it to post limited losses on this stock market week shortened due to ‘Juneteenth’.

On the bond compartment, the yield on 10-year US government bonds continues to rise to around 3.80% following the unaccommodating remarks made this week by Jerome Powell, the head of the Fed.

Yields are also on the rise again on the European bond market, where the German 10-year goes up towards 2.49%.

On the foreign exchange side, the dollar benefited from a jump after having fallen significantly to around 1.1010 euro yesterday, a level close to its annual low of 1.1080.

As a result, the euro consolidates by 0.2% towards 1.0930 against the greenback this morning.

Oil prices continue to fall, affected by signs of slowing growth and therefore reduced demand.

American light crude (West Texas Intermediate, WTI) is trading below 68.7 dollars a barrel (-1.2%) and Brent is trading around 73.3 dollars (-1.1%).

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