CAC40: big sell-off across the board, T-Bonds and gold soar

(CercleFinance.com) - The day got off to a bad start with a -6% plunge on the Tokyo Stock Exchange (the biggest drop in points since mid-October 1987).
.. and it doesn't get any better with 30 minutes to go before the close in Europe, as the Nasdaq plunges a further -3.3%, with the 'VIX' running amok: +58% at 29.5... a real start to stock market panic.... the start of a real stock market panic.
Wall Street posted another session of sharp declines, with the S&P500 down 2.3% and the Nasdaq down 3%, in the wake of Intel's -30% fall to $20.5, its worst ever: the stock is back to its December 2012 levels.

Also of note were Amazon (-11.5%), Microchip (-8%) and Nvidia (-6%).

The Paris Bourse widened its losses, with the CAC40 dropping more than 1.9% to 7,230 points: according to technical analysts, the break of the key support level at 7,275 opens the way for a pullback to 7,050 and then to 6,750/6775 points.750/6775 points.

The CAC40 has fallen by -3.3% over the past week, and is now 12.2% off its May 15 record.
The index has been penalized by the downturn in the banking sector, with Crédit Agricole down 7.1%, Société Générale down 6.2% and BNP Paribas down 3.4%, not to mention ST-Micro and Accor down 6%.

Boosted by the downturn in stock market indices since Thursday, bond markets exploded higher with the publication of US employment statistics for July, with US T-Bonds erasing -16 basis points to 3.815% (and as much as -19 basis points to 3.785%).
The slowdown in the US labor market was sharper than expected, with the US economy generating just 114.000 non-farm jobs in July, according to the Labor Department, well below market expectations, which were generally in the region of 170,000.
The unemployment rate rose by 0.2 points to 4.3%, where economists had expected it to remain stable at 4.1%, while the labor force participation rate stood at 62.7%, and average hourly earnings rose at an annual rate of just 3.6%.

In addition, non-farm payrolls for the previous two months were revised, from 218,000 to 216,000 for May and from 206,000 to 179,000 for June, giving a total revision balance of -29,000 for these two months (10th downward revision in the last 14 months).

This marked deterioration in the labor market could also give rise to concerns about the health of the US economy, as Fed Chairman Jerome Powell expressed concern on Wednesday about a possible "hard landing" for growth.
These concerns were reinforced 90 minutes later by the unexpected -3.3% fall in industrial orders (the second in a row), when economists were forecasting a rebound of around 0.5%.

These worse-than-expected figures confirm the less rosy picture of the US economy painted by the statistics published in recent weeks, in particular the employment report unveiled this morning, which some analysts described as "worrying".

This Friday's wave of risk-offs led to a flight to safe-haven assets: the Bund eased by 10pts to 2.152%, while the French OAT settled for -4.5pts to 2.947%, and construction and civil engineering bonds -3.3pts to 3.612%.
Another safe-haven asset favored on Friday was gold, with the December contract rising to a record $2,520 (the spot contract reissued its record at $2,474/oz).
The dollar came under attack, falling -1.1% against the euro, which broke through the 1.0900 barrier (to 1.0915).

In French company news, AXA reports net income for the first half of 2024 up 6% to four billion euros, reflecting an increase in underlying earnings of 4% to 4.2 billion for gross written premiums and other revenues up 7% to 59.9 billion.

AXA announces that it has reached an agreement to acquire Gruppo Nobis, an Italian insurance company with gross written premiums of 0.5 billion euros and net income of 35 million euros in 2023.

Groupe BPCE's net banking income, at 5,626 million euros, is up 3%, in Q2 2024 compared with Q2 2023, and up 1% to 11,379 in H1 2024 compared with H1 2023, thanks to dynamic commercial activity across all business lines.


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