Cac 40 loses 4% amid tensions between the United States and China, Market news

The saying “sell in May and go away” fits perfectly with the news. After a 4% gain in April, the flagship index of the Paris Stock Exchange begins May with renewed tensions between the United States and China and the deterioration of manufacturing activity indices in Europe and Asia . For those who have forgotten, Donald Trump did not bury the hatchet, and his latest comments remind investors that the so-called phase 1 agreement signed with Beijing in January remains fragile.

As European countries begin, or are about to gradually lift containment measures, the market swings between hopes for a timid economic recovery and fears of a second wave of Covid-19 infections. The week ahead will also be enlivened by numerous corporate publications in Europe and the United States, as well as the monetary decision by the Bank of England on Thursday, and the US employment report for April.

Trump attacks China again

At 12:15 p.m. Cac 40 lost 3.92% to 4,303.01 points in a substantial business volume of 1.25 billion euros. The contract future june on index Dow Jones loose 280 points (-1.19%).

President Donald Trump has threatened to use the tariff weapon as a retaliatory measure against China, which he blames for the coronavirus pandemic, while Secretary of State Mike Pompeo said he has evidence that the epidemic originated in a laboratory located in Wuhan, without giving more details. Meanwhile, US intelligence has accused China of hiding the severity of the epidemic in order to preserve its stocks of medical supplies, according to the AP agency.

Manufacturing PMI collapses in Europe

Manufacturing activity continues to deteriorate worldwide due to restrictive measures linked to the coronavirus pandemic. The PMI IHS Markit index fell to 33.4 points in April in the euro area, marking a new historic low. If the Netherlands is doing better with 41.3 points, they are nevertheless far from the 50 threshold, which marks the border between expansion and contraction of activity, and post their worst score in close 11 years old. France (31.5), Italy (31.1) and Greece (29.5) are at their lowest since the survey was created, and Germany (34.5), since the financial crisis .

With the next gradual lifting of containment measures, improvement can be expected. However, the latest survey ” indicates the industrial sector has collapsed at a double-digit quarterly rate, and any recovery will be hopelessly slow “Predicts Chris Williamson, chief economist at IHS Markit.

These same PMI Markit manufacturing indicators also fell in April in Taiwan and South Korea to fall respectively to 42.2 and 41.6, their lowest levels since 2009. To be continued this afternoon: production figures industrial in the United States.

On the oil front, US light WTI quality crude oil fell 7.6% to $ 18.28, effective 1^er May the OPEC + production quota reduction agreement being offset by the near-saturation of storage capacities in the world faced with the decrease in consumption linked to the virtual shutdown of the economy world. A barrel of Brent from the North Sea fell by 2.6% to 25.76 dollars. In Paris, Total, which will unveil its quarterly accounts tomorrow, lost 7%.

Societe Generale passes provisions

Societe Generale abandons 5.7%. The bank expects to have to provision between 3.5 and 5 billion euros this year due to losses linked to the health crisis, Frédéric Oudéa told Echoes. BNP Paribas and Agricultural credit bend by 4.5% and 5.6% respectively.

The big cyclicals like Airbus (-4.2%), ArcelorMittal (-7.3%), Michelin (-6.2%) and Renault (5%) are weighed down by fear of a revival of the trade war between the United States and China. The European auto index Stoxx 600 is dropping 5% as German Finance Minister Olaf Scholz said the government will not make a decision on a possible bonus for buying new cars for several weeks.

Air France-KLM abandons 5.8% in the wake of the leisure travel sector index after Warren Buffet announced that he had divested his stakes in the four main American airlines.

Conversely, Sanofi rose 1.8%. Kevzara, an anti-arthritis agent developed jointly by the French group and Regeneron, has given promising first results in patients severely affected by the coronavirus.

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