Posted Oct 20, 2022 2:40 PM
After a sluggish morning, the Paris Stock Exchange posted a symbolic gain as US index futures erased their losses. The optimism aroused by a good start to the earnings season is however undermined by mixed corporate performance. Economic uncertainties are also gaining the upper hand, revived by inflation that remains out of control, as the monetary decisions of several central banks approach. In London, Liz Truss announced that she had resigned as Prime Minister after 44 days at 10 Downing Street. On the foreign exchange market, the pound sterling appreciated by 0.4% to 1.1267 dollars. The London Footsie gains 0.32%.
The rally of the last days came up short yesterday as bond yields hit multi-year highs, with investors once again focusing on central banks and how fast they will raise rates “Summarizes Jim Reid, strategist at Deutsche Bank. All the major central banks are going to announce their decisions over the next couple of weeks, so it’s no surprise this is happening. (…)”, he continues.
Around 2:30 p.m., the Bedroom 40 gained 0.37% to 6,043.29 points in a business volume of barely 1 billion euros. The contracts future on US indices oscillate between equilibrium and a gain of 0.4%. On Wednesday, Wall Street retreated after two straight bull sessions. Tesla loses 5.8% in pre-market after announcing, after the close of Wall Street, a turnover lower than expectations, affected in particular by the rise in the dollar, as well as by disruptions in deliveries and production. Conversely, IBM is reported up 3.8%. Big Blue expects to exceed its annual growth forecast thanks to strong demand for its digital services. American Airlines and AT&T rose by around 3% after quarterly results that exceeded expectations.
Watch out for new disappointments
” Looking at the third quarter results, we think there will be more disappointments than the market currently anticipates.predicts Ellen Hazen, chief market strategist at FL Putnam Investment Management, on Bloomberg Radio. If you look at GDP for this year, it just keeps getting revised down and it’s really hard for companies to keep improving their profits in that environment. “, she explains.
Minneapolis Fed Chairman Neil Kashkari said a pause in rate hikes will not be an option as long as inflation continues to rise, even with the Fed funds rate at 4.5%. The market is pricing a 94.3% chance of a 75 basis point rate hike on Nov. 2 and 81.3% of a similarly large rate hike in December, according to CME Group calculations based on Fed funds futures contracts. On the bond market, the yield on American, British and German bonds continues to tighten.
Hermès and TotalEnergies at the top of the Cac 40
Hermes gains 1.2%. The luxury saddler reported a 24.3% growth in sales at constant exchange rates in the third quarter, driven by strong momentum in all businesses as well as the rebound in sales in China. Hermès reiterated its medium-term outlook, namely ” an ambitious goal of revenue growth at constant exchange rates despite economic, geopolitical and monetary uncertainties.
Pernod Ricard yields 0.9%. The spirits group expressed confidence in its outlook for the staggered 2022-2023 financial year, indicating that its ” growth should continue to be dynamic “after a start to the year” very encouraging “, which resulted in a 22% increase in its turnover in the first quarter. RBC analysts note that while sales in Asia turned out to be “ remarkable », the slowdown observed in the United States is « somewhat worrying “.
TotalEnergies rose 2.1% in the wake of the rebound of more than 2% in oil prices, carried by information relayed by Bloomberg according to which Chinese politicians are debating a possible shortening of the quarantine period imposed on foreign travelers. Crude prices suffered on Wednesday from the Biden administration’s decision to release 15 million barrels from strategic US stocks to stem rising prices.
Veralia rises 5.2%. The glass packaging producer raised its annual adjusted EBITDA (gross operating surplus) target, after an increase in its results in the third quarter. The group is now targeting an adjusted Ebitda above 820 million euros this year, against a previous range of between 750 million and 800 million.
Edenred takes 2.6%. The specialist in payment vouchers for the world of work raised its annual forecasts after the announcement of a turnover higher than analysts’ expectations for the third quarter. It is now counting on a gross operating surplus (Ebitda) of between 810 million and 840 million euros. He was previously targeting an Ebitda of between 770 million and 820 million euros.
Finally, nokia fall of 8.2%. The network equipment manufacturer generated operating profit of 658 million euros, up 3.9%, in the third quarter, against more than 702 million anticipated by the Bloomberg consensus. The group’s profit margin has suffered in particular from delays in signing license and patent agreements with mobile phone makers Vivo Communication Technology and Guangdong Oppo Mobile Telecommunications, according to Jefferies analysts.