(Boursier.com) — On this day of armistice in France, trade is calm on the Paris stock exchange. The trend is softer than yesterday, but the flagship index of the Parisian market is still green, this November 11. With a gain of +0.58%, the CAC40 ended at 6,594 points, marking a 3rd consecutive session increase.
Stock markets remain buoyed by the announcement of a sharper-than-expected slowdown in inflation in the United States in October, which could lead the Fed to opt for lower rate hikes in coming. In addition, China has decided to relax health measures intended to stem the spread of the coronavirus. The Beijing government has notably decided to shorten the duration of quarantine for contact cases and travelers from abroad, while airlines that have transported passengers contaminated with Covid-19 will no longer be sanctioned.
In line with the American market and the Chinese announcements, the Asian financial markets ended this morning in positive territory, like Tokyo. The Nikkei index thus gained +2.98% to 28,263.57 points, its highest closing level since mid-September. The Topix gained +2.12% to 1,977.75 points.
In Europe, the contraction of the British economy was less severe than expected in the 3rd quarter. It contracted by 0.2% while economists expected a drop in gross domestic product (GDP) of -0.5% over the July-September period. Across the Channel, the economy should however contract in 5 of the 6 quarters at the end of 2023. In the month of September, which included an exceptional public holiday for the state funeral of Queen Elizabeth II, GDP fell by -0 .6% beyond the Reuters consensus which anticipated a drop of -0.4%. However, the GDP figure for August was revised up to -0.1% after an initial estimate of -0.3% while July economy growth was revised to +0, 3% (+0.1% in first estimate).
In the United States, the day after the report on the American CPI showing a slowdown in inflation, several Fed officials softened their rhetoric. The outlook for managing the inflationary crisis through strict interest rate management is less clear. According to the CME Group’s FedWatch tool, the probability of a rate hike of 50 basis points on December 14, at the end of the next monetary meeting, would now be more than 85%, against less than 15% for the probability of an oversized new move by 75 basis points.
The University of Michigan’s preliminary index of US consumer sentiment for November is the only indicator of the day on the macroeconomic front in the United States. It stood at 54.7 for the month of November 2022 (consensus 59.6), after a level of 59.9 in October. So it is much lower than expected.
After recording yesterday its strongest rise in two and a half years, including a 7% surge in the Nasdaq, Wall Street is now moving in disorganized fashion. At 6 p.m., the S&P 500 gained +0.05% to 3,958 points. The DowJones lost -0.74% to 33,469 points. The Nasdaq Composite is still firm, with a gain of +0.7% to 11,192 pts.
Oil and currencies
With a likely relaxation of health restrictions in China, in a scenario of economic recovery in the country and demand for energy dedicated to production, black gold is rebounding. A barrel of WTI crude gained +2.82% to $88.67. North Sea Brent rose 2.46% to $95.64.
In a projection of less increase in the remuneration of money in the United States, the euro recovers again. The European currency appreciated by +1.3% to $1.0334.
The ounce of gold jumped 3.35% to $1,763.81 (1,706.46 euros).
Bitcoin remains very volatile, plunging again by -5.63%, below $17,000. It trades at $16,808.
Rising values
* Casino (+ 14.34% to 12.52 euros). The retail group is jumping on redemptions of short positions and reassuring information about its short-term debt at least. Casino also bought back on the market a nominal amount of 67,050,000 euros of the Quatrim 2024 covered bond. The bonds bought back will be canceled in the coming days. As of November 10, the balance of the secure senior escrow account is zero.
* Teleperformance (+7.99% to 190 euros). Despite difficult times during the day after losing a third of market capitalization yesterday, Téléperformance is recovering well. The world leader in call centers announced on Thursday that it had launched a share buyback program of 150 million euros following the decline deemed “excessive” in its stock price on Thursday (-33%), after the opening of an investigation in Colombia on suspicion of violation of labor rules. Edwin Palma Egea, Colombia’s Labor Relations Minister, wrote on Twitter: “We have decided to open an investigation against Teleperformance… We have notified the company and invite all workers and trade unions in the country to provide us evidence of alleged violations of labor standards”. The group told him that it had not received any official notification from the Colombian government on this investigation and that it was confident about the results it would give.
According to Teleperfomance, “the management team of the subsidiary in Colombia has always developed the company in compliance with the law”. The opening of this investigation follows information from the American magazine Time and the Bureau of Investigative Journalism, dating from October, on the working conditions in Colombia of employees in charge of moderation on the social network Tiktok, of which Teleperformance is a subcontracting. According to this press information, these employees, whose union rights were not respected, were subjected to traumatic working conditions for a salary of 10 dollars a day.
* Score (+3.01% to 18.14 euros). The reinsurance group is supported by a note from Jefferies which raised its recommendation on the issue to ‘buy’ while increasing its target from 17.5 to 22.5 euros. The analyst highlights the decisive steps taken in the third quarter to strengthen the company’s balance sheet and affirms that “the moment of the peak of risk is passing”. The measures will significantly reduce the risk to the group’s earnings estimates and credit rating. Even after the stock’s recent jump, Scor is still trading at only around 4x estimated 2023 earnings, compared to 7-11x for most peers, the broker adds.
* The relaxation of certain measures intended to limit the spread of the coronavirus in China, in particular by shortening the duration of quarantine for contact cases and travelers from abroad, benefits the luxury and cosmetics sector. LVMH gained 2.82% to 706 euros, with L’Oreal (+2.44% to 346.8 euros), Hermes International (+2.37% to 1,468 euros) and Kering (+2.18% to 543.6 euros).
The sector is also supported by the biannual publication of Richemont. If the Swiss firm fell into the red over the first 6 months of its financial year due to a charge of 2.7 billion euros in connection with the sale of the majority of its stake in YOOX Net-A-Porter, its operating profit from continuing operations climbed 26% to E2.7bn (consensus of E2.3bn). Revenue jumped 24% at real exchange rates (+16% at constant exchange rates), to E9.68 billion, with double-digit growth at real exchange rates across all business segments and distribution channels. The sector also benefited from the announcement of the relaxation of measures against Covid-19 in China.
* Like all “commodity” values, Aperam (+ 4.19% to 30.1 euros), benefits from the relaxation of health measures in China. Oddo BHF adjusted its objective on the file from 31 to 32 euros the day after the quarterly publication of the steelmaker. The analyst speaks of a convincing quarter despite a difficult context.
* Alstom (+2.29% to 24.55 euros). The group has won a contract worth ME98 to design, manufacture, supply, test and commission 78 advanced metro cars for India’s Chennai Metro Rail Limited (CMRL). These new metro cars will run on the 26km corridor forming part of Phase II which will link Poonamallee Bypass and Light House through 28 stations (18 elevated and 10 underground). The contract includes the manufacture of 26 metro trains (three-car configuration) capable of operating at a maximum speed of 80 km/h, as well as the training of personnel.
* claranova (+1.85% to 2.53 euros). In the 1st quarter of the 2023 financial year, Calranova’s turnover reached 96 ME, up 10% at actual rates. An online publication for Oddo BHF, which leaves its 2022-2023 forecasts unchanged. Although the 2nd quarter will be important, the analyst considers that it will still take time for the company to find a path of profitable growth capable of attracting and restoring the confidence of the financial community (economic equation to be solved on PlanetArt, leverage to be confirm on Avanquest, fixed costs to be amortized on myDevices). This lack of momentum explains its ‘neutral’ opinion in the short term despite the upside and a valuation “on the mat” from a fundamental point of view. The objective is confirmed at 4 euros.
* Schneider-Electric (+1% to 141.98 euros). The group raises its offer to buy out the 41% stake in Aveva that it does not hold. The Rueil-Malmaison-based group is now offering £32.25 in cash per Aveva share, an increase of around 4% on the previous offer of £31 per share which valued the industrial software maker at around 9.5 £bn. This new proposal comes at a time when several investors had deemed the initial offer too weak. She was recommended by Aveva’s Independent Directors Committee. Schneider Electric specifies that this is its final offer unless a competing proposal emerges.
* Engie (+0.65% to 13.99 euros). The energy company confirms its earnings on Thursday, after a solid quarterly publication. Oddo BHF reiterated its ‘outperform’ recommendation on the stock with an adjusted target of 17 to 17.5 euros. On current levels, and taking into account its dividend assumption, the group is trading on an implied yield level close to 10% for the current financial year and above 7% for the next two years. In relative terms, Engie trades at a discount of around 30% in its sector, i.e. close to its historical high, underlines the broker. For its part, Deutsche Bank (‘buy’) raised its target from 15 to 16 euros, evoking a new series of solid results, with a very good performance from trading activity. Finally, Goldman Sachs revalued the file from 19.5 to 21.7 euros while confirming its ‘buy’ opinion.
Falling values
* Thales (-8.63% to 112.25 euros). The French defense electronics specialist weighed down the CAC40 a little, carried away by the publication of data on the “dark web” by the group of Russian-speaking hackers LockBit 3.0. This data had been hacked at the end of last month. According to ‘franceinfo’, Thales confirmed this information while specifying that “no genuine ransom demand” was made. “Thales security experts are currently analyzing the published data. For the moment, there is no impact on the group’s activities”, specifies the information site. On November 2, Thalès indicated that it had not identified any trace of compromise or impact on its information systems after the allegation of data theft by the group of hackers. “Thales security experts have identified one of two likely sources of the information theft. It is a partner account on a dedicated exchange portal which led to the disclosure of a limited volume information”, explains Thales, who is continuing its investigations to identify the other source.
* Akwell (-6.35% to 15.64 euros). Akwel recorded consolidated revenue of 251.1 ME in the 3rd quarter of 2022, up +18.7% as published compared to the previous financial year, and +22.3% at scope and exchange rates constants. In a still difficult market context, the group confirms the gradual recovery of its activity but is still down -3.3% compared to the 3rd quarter of 2019, before the health crisis.