The modest rebound of the first 6 hours has not 'held', and the Paris Bourse reverses course with 45 minutes to go: the CAC40 loses between -0.2% and -0.3% at 7055/7,060 points... a 5th consecutive decline is on the horizon.
The Euro-Stoxx50 sank by -0.1% to 4,130/4,125 points, down -8% since its peak on July 28 and -4% since September 15.
Wall Street's opening gains were also wiped out in 1 hour (-0.1% on the S&P500 and Nasdaq, -0.3% on the Dow Jones).... while a barrel of WTI soared to a new annual record of +2.7% at $93.

The other 'driver' to keep a close eye on is the VIX, which on Tuesday evening broke above 18.8, its annual zenith.

The scent of a correction had been wafting over the world's stock markets for several days, with many of them breaking through major technical supports in a general climate dominated by risk aversion.

Investor sentiment had deteriorated significantly last week with the prospect of high rates for an extended period, a scenario reinforced by the Fed's latest statements.

The situation worsened even further yesterday, as the Paris market posted its fourth consecutive session of declines, briefly breaching the decisive 7050-point threshold.

While the CAC40 had gone as far as posting a 17% annual rise in April, its gain since the start of the year has been severely eroded to just 9% today.

On the European bond market, yields eased by -1.5 basis points after having risen sharply in recent weeks, with the German 10-year holding steady at around 2.785%, its highest level since 2011, while our OATs fell back from 3.3600 to 3.3450%.

In the United States, the yield on the 10-year Treasury bond settled above the crucial level of 4.56%, a level not seen since 2007, while the 30-year yield soared to 4.70% (an annual record and even a 16-year high).

The gloomy climate was exacerbated yesterday by indicators reinforcing the scenario of a coming recession in the United States, also fuelled by the threat of a possible shutdown at the end of the week.

The Commerce Department announced on Wednesday a timid 0.2% rise in US durable goods orders last month, following a 5.6% fall in July (revised from an initial estimate of -5.2%).

Excluding transportation equipment, US durable goods orders rose by 0.4% in August compared with the previous month, but excluding defense equipment, they contracted by 0.7%.

According to a recent Goldman Sachs survey, 77% of investors now expect a recession across the Atlantic over the next two years, with 23% believing it will occur in 2023 and 53% in 2024.

In terms of currencies, the dollar continues to benefit from the fact that the yield on Treasuries is still much higher than that on European paper, pushing the euro down by -0.4% to 1.0532 against the greenback (which hit a new high since March 8).

In France, household confidence in the economic situation is deteriorating, with the Insee synthetic indicator dropping two points to 83 in September, well below its long-term average (100 between January 1987 and December 2022).

Investors will also be watching for the release of US oil inventories, while fears of a slowdown in global growth have so far had little impact on crude prices.

Both Arabia and Russia intend to maintain their quota cuts until the end of 2023, and Brent crude is up +2.6% to $96.3 in London (the highest level since early November 2022), while US light crude is currently up +3% to almost $93 on the NYMEX, the highest level since October 2022.
The only hope of an easing has just been raised by US crude oil inventories, which fell by -2.2 million barrels last week, continuing their downward trend of recent weeks, due in particular to a reduction in refinery activity, announced the US Energy Information Agency (EIA) on Wednesday.

Gasoline inventories rose by 1 million barrels, while distillate reserves, which include heating oil, fell by around 0.4 million barrels.

Refinery capacity utilization fell to 89.5%, compared with 91.9% the previous week.

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