The rise in equities seems temporary and paradoxical - 08/04/2022 at 09:05

The rise in equities seems temporary and paradoxical – 08/04/2022 at 09:05

The French government has accepted the TotalEnergies project, which provides for the installation of a floating unit for the regasification of liquefied gas from foreign countries.  (©Total)

The French government has accepted the TotalEnergies project, which provides for the installation of a floating unit for the regasification of liquefied gas from foreign countries. (©Total)

Fighting inflation remains a priority for central banks. But the companies’ half-year results supported the markets. The risks don’t go away. A recession scenario, which requires a slowdown in monetary normalization, reassure investors?

More than five months after Russia’s invasion of Ukraine, the world’s stock markets seem to be taking a breather. Thanks to a rebound set in motion from mid-June, the CAC 40 dropped only 10% on August 1 since January 1.

After posting a decline of nearly 18% in the first half of the year, the Parisian index recovered nearly 9% in July and European stock markets had their best monthly performance since November 2020. On Wall Street , the major indexes also , returned in six weeks. The S&P 500 and the Nasdaq, after losing 21 and 29% respectively in the first half, recovered 9 and 12.3% in July. Only emerging markets did not participate in the rebound.

Good results for half a year

However, bad news piled up activity and raised fears of a recession. “The GDP figures for the second quarter confirm the decline in global economic growth,” said Guy Wagner, strategist at BLI (Banque de Luxembourg Investments).

Inflation in the main developed countries has not weakened, more than 9% in the United States and close to 8% in the euro zone. But investors want to see the bright side: if growth slows, major central banks, which have taken the necessary steps to curb inflation, may slow the pace of rate hikes,

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