The Paris Bourse continues to fall towards -1.5/-1.6%, with the CAC40 sinking towards 7,200pts.
The Euro-Stoxx50 is no better off at 4,210, and Wall Street continues the correction it began late Wednesday, with the Dow Jones down 0.6% and the S&P500 and Nasdaq down 0.8 to 0.9%.

Tech stocks are weighed down by the tension in US yields across the entire curve: with a tension of +*9.3pts at 4.4900%, the US 10-yr yield is pulverizing its worst annual levels and posting its highest cost since 2006.
In Paris, we note the -19/-20% plunge of Kalray (the French A.I. star in the start-up category), which sharply reduced its 2023 sales target and reported a loss of -€3 billion (whose partnership disappoints).

The day got off to a bad start in Asia, with a sharp decline in Tokyo: in reaction to the Fed's announcements, the Nikkei index fell by almost 1.4% (watch out for the BoJ's meeting tomorrow morning, as it could turn out to be more restrictive), while the CSI 300 index of large-cap stocks in mainland China lost 0.7%.

The Fed seems to have cooled investor confidence, which was initially perplexed around 8 p.m. (50/50 rate hike probability for November 1), but the heaviness has taken hold, as the US Federal Reserve is leaning towards keeping rates above 5% until the end of 2024.
For optimists still hoping for a 'pivot' in mid-2024, or early autumn, Jerome Powell, announced a revision of the institution's inflation forecast to 2.6% from 3.7% in 2024.

But Jerome Powell reiterated his confidence in the strength of the US economy and sharply revised 2023 growth from +1 to +2.1%, cooling hopes of rate cuts below 5% next year.

Fed officials' revised projections for interest rates continue to point to another rate hike in 2024, and the Fed now seems to be banking on a 'soft landing' for the economy", Commerzbank's analysts point out.

Bastien Drut, head of strategy and economic research at CPR AM, agrees: "The fact that growth has been stronger than expected justifies higher rates for longer.
In the UK, the Bank of England (BoE) has confirmed a further increase in the cost of borrowing, at the risk of dragging the British economy into recession.
The Swiss National Bank (SNB) also maintained its key rate at 1.75%.

On the European bond front, annual ceilings were smashed, with our OATs recording a record yield of 3.30% (+6pts), Bunds also posted a +6pt rise to 2.762%, and Italian BTPs tightened by +10pts to 4.555%.
On the currency front, the flirtation with the 4.50% mark on the T-Bond 2033 boosted the Dollar, which recovered +0.3% against the Euro, which retreated to 1.0630.

The market took note of the Philly FED index and jobless claims and the Conference Board's leading indicators
Manufacturing activity fell back sharply in the Philadelphia region in September, from +12 last month to -13.5 this month, returning to its July level.

This is the 14th contraction in the last 16 months'... and new orders and shipments also fell, to -10.2 and -3.2 respectively in September.

Businesses continued to report overall price increases and an overall decline in employment, but the survey's future indices improved, suggesting more widespread growth expectations for the next six months.

Weekly jobless claims fell by -20,000 to 201.000 last week in the US, contrary to expectations, reflecting once again the strength of the US job market.

Another closely watched data point, the four-week moving average - which better reflects the underlying trend on the labor market - also fell by 7,750 to 217,000.

Copyright (c) 2023 CercleFinance.com. All rights reserved.