(CercleFinance.com) – A bearish momentum is setting in on equities and strengthening over the hours, as important technical supports drop one after the other, the breakout of 7,000 proving to be psychologically penalizing.
The Paris stock market is now unscrewing by nearly 2.6%, around 6,885 points, at the dawn of a week that promises to be busy, between company results, economic indicators and meeting of the American Central Bank.
No less than 106 S&P 500 companies must indeed reveal their accounts in the coming days, including several Wall Street heavyweights such as Johnson & Johnson, Apple, Tesla, Amazon, GE and McDonald’s.
Investors will also be very attentive to the conclusions of the Fed’s monetary policy meeting to be held tomorrow and Wednesday. Although no major announcement is, a priori, expected this month, there is still room for doubt in view of the galloping inflation of recent weeks. The age-old question of the timing of the central bank’s rate hike remains at the heart of investors’ concerns.
The consensus among economists is expecting four rate hikes from the Fed so far this year. A paradigm shift would not be without consequences for stock markets.
Especially if the FED starts its cycle by hitting hard, with a rise of +50 basis points.
“As a result, the trend in equities will no longer be driven by multiple expansion and will have to rely exclusively on pure earnings growth,” warns Columbia Threadneedle Investments.
Despite these prospects for monetary tightening, rates on the bond market are tending to fall back and the interest rate on the US 10-year debt remained at 1.76% on Monday, well below its highs of last week.
In this busy context, investors learned this morning of the composite flash PMI index of overall activity in France, calculated by IHS Markit. This fell to 52.7 in January, against 55.8 a month earlier, and indicates the weakest growth rate of the private sector in the last ten months.
The index was pulled down by the services activity, hit by the sharp rise in the number of new daily cases of Covid-19 in France.
Business growth also slowed in the eurozone private sector in January due to spillovers from the rapid spread of the Omicron variant.
The ‘flash composite’ PMI – which measures overall activity in the euro zone – fell from 53.3 to 52.4 this month, on the heels of the services sector which fell nearly – 2pts, from 53.1 to 51.2 in January.
The ‘flash’ PMI index for manufacturing in the euro zone, on the other hand, recovered to 59 this month, against 58 in December.
In the news for French companies, it’s a dark day for EHPAD operators with Orpéa, which fell by -17% (suspension of quotations pending a press release) and dragged Korian in its wake (-8 %).
Orpea sees its capitalization fall by -1 billion euros and plunge by -50% compared to its peaks at the end of February 2020.
Note also heavy releases on recently weakened values such as Soitec which shows -8% towards 155.2E.
Also a surprise fall of -8% on St Gobain towards 58.4E, from Worldline (-7% towards 42.2E).
Kering announces the signing of an agreement to sell its entire stake in Sowind Group, which owns the Swiss watch manufacturers Girard-Perregaux and Ulysse Nardin, to its current management.
On the ‘survivors’ side, Bic (+1.5%) launched a second share buyback program with an ESG component for an amount of 40 million euros, over a vesting period running from January 24 to December 22. 2022 at the latest, and at a maximum purchase price set at 100 euros.
Wendel announces the signature of an agreement, jointly with the company Colibri, for the acquisition of the financial services segment of Adtalem Global Education. In this context, it will acquire ACAMS, valued at around 500 million dollars.
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