(News Bulletin 247) – The Paris Stock Exchange remains in sharp decline, still undermined by fears of a recession in the United States. The CAC 40 is at its lowest since November.

At the beginning of August, the decline has not taken a vacation. The Paris Stock Exchange, like the Asian markets a little earlier this morning, is moving sharply downward, still shaken by fears of a recession in the United States.

The CAC 40 fell by 2.5% at midday, below 7,100 points at 7,072.87 points after having fallen by more than 3% around 9:30 a.m.

On Friday, the leading Parisian index had already returned 1.6% to close at its lowest level of the year following a disappointing American employment report.

Nervous markets

The leading Parisian index has in total lost more than 6% since the beginning of August, which therefore does not usurp its reputation as a high-risk month on the financial markets.

Elsewhere in Europe, the Dax plunged by 2.4% in Frankfurt, the FTSE 100 in London stumbled by 2.1% while the pan-European Stoxx Europe 600 index dropped another 2.6%.

Nervousness has risen again as bad news from the Atlantic continues to pile up, fueling fears of a slowdown in the US economy. At the end of last week, traders had indeed become aware of a weakening of the labour market and a deterioration in manufacturing activity in the United States.

“There are simply too many fires to put out, making a possible recovery on Monday a pipe dream – especially with resurgent US recession fears and the looming spectre of a hard landing chilling global investors to the bone,” Stephen Innes of SPI Asset Management was quoted as saying by AFP.

“The unemployment rate is now significantly above what Fed members had 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 excluded,” explains Bastien Drut, head of strategy and economic studies at CPRAM.

According to the Fedwatch tool, markets now estimate a 70% probability that the Fed will cut rates by 50 basis points (0.5 percentage points) in September and a 50% probability that the Fed will cut rates by 75 basis points (0.75 percentage points) between November and December.

Nasdaq expected to fall sharply

In the United States, the major indices are expected to fall sharply at the opening. The Dow Jones is expected to fall by 1.6%, the S&P 500 by 2.7%, while the Nasdaq 100 is expected to plunge by 4% and thus should experience its biggest opening fall in more than four years, Bloomberg reports.

Having entered a correction phase, the leading index of technology stocks will be weighed down by its stars including Nvidia, which is expected to fall by almost 10% while Apple is expected to plunge by 8%, while Berkshire Hathaway, Warren Buffett’s conglomerate, has indicated that it sold half of its shares in the Apple brand in the second quarter.

It is in this very heavy context that investors will take note of the ISM services index this Monday afternoon, after the disappointment on the manufacturing component on Thursday. In Europe, growth in private sector activity in the eurozone slowed in July to 50.2 in July, but still remains at the 50 mark, the zone that separates growth and contraction in activity. In detail, the services PMI index crumbled to go from 52.8 in June to 51.9 in July.

“The eurozone economy is growing at a snail’s pace in July. At the sector level, services are not accelerating as they did at the beginning of the year, while the slowdown in industry continues unabated,” notes Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

In terms of values, all components of the CAC 40 are in the red, including Teleperformance which is down 7.7%, Veolia 5.6% while STMicroelectronics is down 5.7%.

On the foreign exchange market, the euro is benefiting from the weakening of the dollar and is up another 0.4% at 1.0950 dollars. The yen is trading at 142.25 to the dollar (+3%), after reaching a peak since January at 141.7 yen.

On the oil price side, they are at their lowest in six months, weighed down by concerns about the health of the American economy. The October contract on North Sea Brent lost another 1.9% to $75.39 per barrel, while the September contract on WTI listed in New York recovered 2% to $72.02 per barrel.