(CercleFinance.com) – The Paris Stock Exchange (+2.5%) recorded one of the strongest increases of the decade in 8 hours of continuous quotations, with a directissime of +6.5% (5,700/6,025 ) without any intermediate consolidation.
Given the context (inflation revised upwards and US interest rate target raised to 5%, threat of a general strike in France, multiplication of the evocation of a Ukrainian conflict degenerating into nuclear war, etc.) this burst bears the signature of ‘a massive intervention by the FED to influence the trajectory of the ‘VIX’ which crossed a crucial resistance at 33 while the 3 main US indices pulverized their annual lows, via a rupture ‘gap’ at 3:30 p.m.
This is a strong signal sent to the markets: the central banks intend to maintain control and prohibit a correction that looks like a ‘crash’.
And they symmetrically orchestrate a ‘flas-crash’ on the rise which is costing billions to short sellers, forced to redeem themselves in disaster despite a ‘macro’ context which proves them 120% right.
The Euro-Stoxx50 passes the +2.5% mark at 3,444 after the publication of retail sales and import prices for September in the United States which reassures a little… insofar as this does not provide no new pretexts for the FED to toughen up its fight against inflation.
Expected to be up slightly by economists, retail sales in the United States stagnated in September, after rising 0.4% the previous month (revised figure from an increase of 0.3% initially estimated), according to the Commerce Department.
Excluding the automotive sector (vehicles and equipment), US retail sales posted a symbolic gain of 0.1% last month compared to August, where the market consensus had on the contrary anticipated a small decrease.
Import prices in the United States fell by 1.2% in September on a sequential basis according to the Department of Labor, after a decline of 1.1% the previous month (+6% on an annual basis). Excluding the 7.5% drop in fuel prices, they also fell by 0.4% in September.
For their part, export prices fell by 0.8% overall, or +9.5% on an annual basis.
There were also ‘stats’ this morning in Europe: according to the first estimates published by Eurostat, the euro zone recorded a deficit in trade in goods with the rest of the world of 50.9 billion euros in August 2022, against a surplus of 2.8 billion euros a year earlier, in August 2021. Intra-euro area trade reached 210.5 billion euros in August 2022, up 34.8% compared to August 2021 .
Operators also took note of the consumer price index in France for the last month: they increased by 5.6% in September, thus slowing down after +5.9% in August, according to INSEE which confirms therefore its provisional estimate published at the end of last month.
The interest rate markets welcome the figures of the day and the relaxation is general with US T-Bonds at -7Pts towards 3.88%, OATs at -10Pts at 2.80%, Bunds at -9Pts towards 2.21% , Italian construction at -10pts (4.61%).
The British ‘Gilts’ relax by -20Pts (and -50Pts in 48H) while the Minister of Finance throws in the towel and resigns, his tax reform being largely buried: the Bank of England has won the game according to the ‘City’ .
The other big event this Friday is the first quarterly (July / September): JPMorgan Chase publishes a net profit down 17% to 9.74 billion dollars for the third quarter of 2022, or 3, 12 dollars per share, mainly due to provisions for credit losses of 1.54 billion over the period… but it’s better than expected and the title gains +5.5% in pre-opening.
JP Morgan saw revenue rise 10% to $33.5 billion, with net interest income growing 34% amid higher rates, but other types contracting 8% of income.
Citigroup publishes a turnover of $18.5 billion, up 6% compared to the same period a year earlier and EPS stands at $1.63, down 24%.
Wells Fargo reported EPS down 27%, driven by significant provisions for losses in the credit business.
Excluding the banking sector, the insurance and health services group UnitedHealth indicated that it was raising its outlook for adjusted EPS for the year 2022 to between 21.85 and 22.05 dollars, on the occasion of the publication of its results for third trimester.
On the securities side in Paris, Danone announces its decision to launch the process of transferring control of its Essential Dairy and Plant-based (EDP) activity to Russia, ‘the best option to ensure the continuity of the operational performance of this activity’.
Thales has announced a new partnership with Microsoft, to offer a joint offer of enhanced services for detecting and responding to cyber threats within cloud environments based on the American’s Sentinel and Defender solutions.
Pernod Ricard announces a significant increase in its minority stake in Sovereign Brands’ super-premium wines and spirits portfolio. “This additional investment will strengthen the ambitious long-term partnership initiated in September 2021 and already marked by success,” indicates the group.
Stifel maintains its ‘hold’ recommendation and its target price of 200 euros on Pernod Ricard, the day after the announcement by the spirits group that it would increase its stake in Sovereign Brands.
Oddo BHF reaffirms its ‘outperformance’ opinion on Engie but with an adjusted price target of 18.5 to 17 euros, following the average WACC increase of around 130 bp to 7.2%, and with estimates now 18 % and 8% above the 2023-24 consensus.
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