After six increases in seven sessions, the Paris Stock Exchange has come to a halt, hampered by Walmart’s profit warning, the IMF’s further lowering of its growth forecast for the world economy to 3.2% this year, against 3.6% in April, and the prospect of a drop in gas consumption in Europe. The energy ministers of the European Union have indeed reached an agreement on a 15% reduction in their consumption between August 2022 and March 2023, due to uncertainties about supplies from Russia. Derogations have, however, been granted to certain countries.
Shortly before 4 p.m., the Bedroom 40 lost 0.50% to 6,206.23 points in a business volume of 1.22 billion euros. In New York, the Dow Jones yields 0.35% and the Nasdaq Composite 1.19%.
” Severe recession »
Gas supply is a major challenge, especially since Gazprom has announced that it plans to reduce flows to Germany via the Nord Stream 1 gas pipeline to 20% of capacity from Wednesday. These reductions encourage Europeans to turn to oil to meet their energy objectives. Thus, the barrel of Brent from the North Sea rose by 1.8% to 106.74 dollars. TotalEnergies gain 1%.
” I don’t think Russian gas cut risk is materially priced into European equitiessaid Paul Jackson, head of asset allocation at Invesco, on Bloomberg TV. If supplies are cut sharply it will lead to a severe recession and I don’t think that’s priced in yet “, he added.
On Wall Street, walmart, which now expects a drop of 11% to 13% of its annual profit, fell 8%. The world’s leading retailer said its customers are prioritizing spending on food and fuel over clothing and other more profitable discretionary spending as inflation eats away at household budgets. Amazon follows with a decline of 4.3%.
The Fed and the Gafam in the crosshairs
At the European level, the Stoxx 600 retail index shows the largest sectoral decline with a decline of 3.6%. In Paris, Casino gives up 5%, falling at the same time to its all-time low. Crossroads yields for its part 0.7%.
Investors also have their eyes on Washington, where the US Federal Reserve begins a two-day meeting of its monetary policy committee on Tuesday. The market is generally pricing in a further 75 basis point hike in the bond rate. Fed-funds tomorrow, without totally ruling out a more aggressive move. The probability of a rise of 100 basis points is estimated at around 10% by the market.
This week is also marked by the publication of the quarterly results of Gafam. Alphabet and Microsoft will release their quarterly accounts after the close of Wall Street. Apple, Meta Platforms (Facebook) and Amazon will follow by Thursday evening. In France, 28 components of the Cac 40 must engage in the exercise between this evening (Michelin, LVMH) and Friday.
Eutelsat and Soitec sanctioned
Dassault Systems appreciated by 1.7%. The software publisher raised its forecast for diluted net earnings per share for 2022 after a second quarter during which its results generally exceeded the expectations of its leaders and those of analysts.
Eutelsat further fall of 14.5%. The satellite operator announced on Tuesday the signing of a memorandum of understanding for a merger with its British competitor OneWeb. The transaction, which will value OneWeb 3.4 billion dollars (3.3 billion euros), will be through an exchange of shares.
Soitec loose 7.1%. The semiconductor manufacturer confirmed its objectives for its 2022-2023 financial year but experienced a marked slowdown in growth in the first quarter ended at the end of June. Revenue reached 203 million euros, up just 12% as reported and 6% at constant scope and exchange rates. Credit Suisse analysts point out that annual revenue growth has “ significantly slowed down to come out 14% below the consensus.
Edenred gains 3.4%. The payment voucher specialist has indicated that it is aiming for a record gross operating surplus (Ebitda) for 2022, of between 770 and 820 million euros, after having seen its half-year results increase sharply.
Veolia Environment down 3.9%. JPMorgan, which has taken over the cover of the title to be “underweight”, says it is pessimistic about the impact that the European energy crisis will have on the group.
Among other analyst notes, Exane BNP Paribas downgraded the cement company Vicat (-5.2%) from “outperformance” to “neutral”.