The decline in actions against the coronavirus attenuated by reassuring PMIs

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EUROPEAN SCHOLARSHIPS TREND LOWER AT MID-SESSION

PARIS (Reuters) – Wall Street is expected to continue its decline on Friday in the wake of the Asian and European markets, the renewed concern over the spread of the coronavirus in China and elsewhere continues to favor profit taking after the highs at the start of week, even if the activity of eurozone companies shows reassuring signs.

Futures contracts on New York indexes signal an opening down from 0.3% to 0.5%.

In Paris, the CAC 40 lost 0.11% at 6.055.93 points at 12.10 GMT after losing up to 0.86% at the very start of the session. In London, the FTSE 100 yields 0.21% and in Frankfurt, the Dax is unchanged.

The EuroStoxx 50 index is down 0.08% and the FTSEurofirst 300 by 0.12% while the Stoxx 600 is almost stable, at 0.9% from its record on Wednesday.

The main European indices are thus moving towards a negative weekly performance after two weeks of sustained rise.

The number of new cases of coronavirus infection in China increased again on Thursday according to official figures published by Beijing after previous reports had hoped for a slowdown in the epidemic. The Chinese Communist Party politburo, for its part, acknowledged that the epidemic had not yet reached its turning point.

In Europe, the first results of IHS Markit’s monthly surveys of purchasing managers in the private sector are nevertheless rather reassuring: the PMI “flash” composite euro area index, at 51.6 for February, exceeds estimates the most optimistic and the German manufacturing PMI is recovering even if it continues to reflect a contraction.

“The slight rise in the euro area composite PMI is a big surprise. It should at least temporarily dispel fears of an imminent recession in the euro area,” said Oliver Rakau, economist at Oxford Economics, noting that “the most striking element is the jump in the German manufacturing PMI”.

The picture is less encouraging in Japan, where the flash manufacturing PMI, at 47.6, reflects a contraction in activity unprecedented in the past seven years which fuels the fear of a recession.

THE VALUES TO FOLLOW AT WALL STREET

VALUES IN EUROPE

Once again, the downturn affects in particular the sectors of the European coast most exposed to Chinese demand: that of oil and gas lost 1.07%, that of the automobile 0.89%, that of raw materials 0 08%.

In Paris, ArcelorMittal (-1.23%), TechnipFMC (-1.56%) and Renault (-0.81%) are among the biggest declines in the CAC 40. In Frankfurt, Daimler lost 1.76% after said the epidemic would have “significant adverse consequences” on its production.

On the upside, Sopra Steria takes 7.22%, the best performance of the Stoxx 600, after the announcement of solid annual results and a plan to buy Sodifrance (-2.15%).

RATE

The better than expected figures for flash PMIs caused a trend reversal in the European bond market with a sharp rise in yields: that of the German ten-year Bund rose slightly to -0.44% when it lost more two basis points to -0.465% just before the indexes are released.

On the American market, risk aversion still prevails: the ten-year yield, at 1.4915%, lost almost four points, the lowest since September 5.

EXCHANGE

The renewed risk aversion benefited the yen, up 0.2% against the dollar, erasing part of its losses from the previous two sessions.

The “dollar index”, which measures the fluctuations of the greenback against a basket of reference currencies, fell 0.19% after gaining more than 2.5% in three weeks and reaching its highest level since Thursday almost three years.

The euro takes the opportunity to go back to 1.08 dollar.

The British pound, for its part, takes advantage of the British PMI flash indices, deemed reassuring by traders.

OIL

Crude prices are in sharp decline, the resumption of the increase in the number of new cases of coronavirus contamination in China and the Japanese flash PMI having rekindled fears for demand, which are combined with the downward impact of the vigor of the dollar.

Brent crude drops 1.97% to $ 58.14 a barrel and American light crude (West Texas Intermediate, WTI) 1.87% to $ 52.87.

GOLD

The price of an ounce of gold on the spot market, up by almost 1%, reached a peak of seven years at 1,635.98 dollars.

(Marc Angrand)

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