(News Bulletin 247) – The Paris Stock Exchange closed sharply down this Friday evening, feverish after a weaker-than-expected report on American employment. The CAC 40 fell by 1.61% to 7,251.80 points on Friday evening.

A weekend to forget. The Paris Stock Exchange closed the day with morale down, worried by the signals suggesting a slowdown in the American economy.

The CAC 40 fell by 1.61% to 7,251.80 points this Friday evening and ended the week at its lowest point of the year. On a weekly basis, the leading Parisian index fell by 3.54%.

A deleterious climate has settled on the markets, with the publication of the official employment report in the United States. It highlights a very clear deterioration in the American labor market last month.

The U.S. economy added fewer jobs than expected, with 114,000 nonfarm payrolls added in July, down from 179,000 in June. Expectations were for 185,000 jobs added last month, according to the Marketwatch consensus.

Another sign of deterioration in the job market is the unemployment rate, which unexpectedly rose to 4.3% last month, compared to 4.1% in June. This constitutes one of “the largest gaps since the Covid recovery”, notes Florian Ielpo, head of macroeconomic research at Lombard Odier Investment Managers.

“This very mediocre job report corresponds fairly broadly to the ‘unexpected weakening of the labor market’ that Fed Chairman Jerome Powell has been talking about for several months and which would be a justification for rushing rate cuts. The unemployment rate is now significantly above what Fed members have forecast for the end of the year and a rate cut of 50 basis points (0.50 percentage point, Editor’s note) in September can no longer be ruled out,” adds Bastien Drut, head of strategy and economic studies at CPRAM.

Indeed, this scenario is clearly starting to make headway in investors’ minds. According to the Fedwatch tool, the markets assign a probability of 78.5% to the Fed lowering its rates by 0.5 percentage points in September compared to 22% the day before, and 11.5% the week before.

Violent movements were thus observed on several assets. On the bond market, the yield on the 10-year US Treasury bond fell to 3.80% while it was around 4% a little earlier in the day. Above all, the euro increased its gains, or more precisely, the dollar plummeted. The eurozone currency jumped 1.2% against the greenback to 1.0916 dollars while it had gained 0.3% before this indicator.

These fears of a poor state of the world’s leading economy are also spreading to oil prices. Atonic at midday, oil prices are dropping, the October contract on North Sea Brent is plunging by 3.2% to $76.98 per barrel, while the September contract on WTI listed in New York is down 3.5% to $73.61 per barrel.

The tech rout

Markets were already under pressure ahead of the jobs report, disappointed by the generally worse-than-expected results of the American technology giants. The e-commerce giant Amazon dropped more than 10% after revealing a lower-than-expected outlook.

Microprocessor maker Intel is down 30% after reporting a second-quarter loss.

Only Apple has managed to resist this capitulation, with the brand with the apple exceeding expectations in the third quarter.

On Wall Street, these multiple disappointments have tarnished a very heavy trend. At the close of the European markets, the Nasdaq lost 3.1%, the Dow Jones 2.2% while the S&P 500 fell by 2.5%.

Today’s survivors

The macroeconomic news almost tended to make us forget the rest of the company publications. The last residents to reveal their half-yearly financial statements, Engie and Axa, passed the test with flying colors. The energy company gained 2.8%, after raising its 2024 outlook and announcing a return to profits in the first half of the year at 1.9 billion euros.

We also find Axa (+1.4%), driven by results deemed solid by the market, with a 5% increase in its net profit to 4 billion euros.

STMicroelectronics returned 5.6%, weighed down by disappointing announcements from American Intel, which revealed quarterly accounts in the red.

At the forefront of fears about the economy, banks took a hit the day after their quarterly results. Crédit Agricole dropped 5.6% and Société Générale fell 5.9%.