(CercleFinance.com) – After spending a good part of the day in negative territory, the Paris stock exchange finally ended the day’s session with an anecdotal gain of 0.07%, to 6,542 points.
Paris is thus ahead of the E-Stoxx50 (-0.22%) but also Frankfurt (-0.43%) and London (-0.03%).
The stock market indices are playing the ‘fait accompli’ of inflation: it reached an unprecedented score of 8.5% annualized in the United States in March, unseen since 1981.
Investors now have a complete picture of the situation with the publication of the ‘PPI’: producer prices rose by 1.4% in March 2022 (over one month +11.2% over 1 year), thwarting a consensus which was counting on +1.2% (after +0.9% in February 2022).
Also closely watched, ‘core’ prices, i.e. excluding food and energy, jumped 1% in March 2022 (i.e. +7% at an annual rate), against a consensus of +0.5% (after +0.4% in February).
James Bullard warned that this historic inflation associated with a necessary rise in rates induces a high risk of recession and that any other interpretation of the situation is a matter of ‘fanciful’ theses.
Wall Street maintains a bullish bias, the Nasdaq standing out (+1.4%) ahead of the S&P500 (+0.6%) and the Dow Jones (+0.4%).
Inflationary pressures set in over time and the Banque de France is factoring this phenomenon into its forecasts: it is revising its growth target for the 1st quarter by half, from +0.5% to +0.25% (this which makes the annual target of +3.6% in 2022 obsolete).
In addition, the international situation remains uncertain, both between kyiv and Moscow and in China where the new drastic health restrictions are slow to be lifted, which is seriously disrupting exports to the West.
The next ‘macro’ highlight for the markets will be the ECB Governing Council, whose conclusions are expected tomorrow.
On the ‘micro’ front, April 12 marked the start of the quarterly results of major American banks with JPMorgan Chase: a big disappointment since net profit fell by 42% to $8.28 billion (i.e. $2.63 per against $2.69) following a $1.46 billion increase in provisions for risk (against -$4.16 billion in reversals of provisions a year earlier).
JPMorgan’s revenue fell 5% to $30.72 billion, slightly below the expected 30.86.
Blackrock, on the other hand, did better than expected with record inflows (+$86 billion) and an increase in the value of outstandings (to $9.570 billion compared to $9.100 in 2021) linked to the rise in the markets over 12 months.
The profit exceeds $1.45 billion and the EPS soars to $9.52/share against $8.75 expected.
Results from Goldman Sachs, Citigroup and Wells Fargo are expected tomorrow.
In general, the results season will be closely monitored in order to measure the impact of the rise in the cost of raw materials and wages on company profits.
Investors hope in particular to be reassured about the ability of companies to pass on the increase in their costs in the prices charged to customers.
On the rate side, little variation on the Bunds and the OATs (1.28% against 1.300%, the Bunds stagnated at around 0.7900%), the US T-Bonds, on the other hand, eased by -6Pts towards 2.665%.
Gold is still progressing and crosses the $1,970/Oz mark, oil gains another +1.7% after the 6% gained the day before (it quotes $106.8 in London) and takes +1.5% (at $102.4 on the NYMEX).
In the news of French companies, Air France announces the launch of ‘Air France ACT’, a program presenting the company’s new CO2 emissions reduction trajectory, to contribute to the achievement of the objectives of the Paris Agreement of combating climate change.
Stellantis announced on Wednesday that it plans to consolidate its financial services in China into a wholly-owned auto finance company.
TotalEnergies (+1.2%) and Eneos announce the creation of a joint venture to develop decentralized solar energy production for their B2B customers in several Asian countries (Japan, India, Thailand, Vietnam, Indonesia, Philippines, Cambodia, Singapore and Malaysia).
Finally, Christian Dior, the parent company of LVMH (+0.5%), posted sales of 18 billion euros for the first quarter of 2022, up 29% (including 23% organic), in a environment still disturbed by the health crisis and marked by the war in Ukraine.
Hermès and Kering, for their part, yield a little more than 1% in Paris.
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