The US markets erased their positive start to the week yesterday by finishing at the lowest of the day at almost. The contained fall which dominated at the time of the European closing turned into a new spanking. With their beautiful label of favorite expiatory victims of 2022, technology stocks have been cut indiscriminately. The Nasdaq 100 lost 3% in the battle. At the same time, how can you do otherwise when the seven largest stocks in the index, which represent nearly 50% of its weight, are losing between 2 and 7.5%? At the same time, the S&P500, largely inbred on large caps, fell 2.1%. As for the Dow Jones, less weighted in technological files, its reflux is slightly less at 1.78%.
In Europe, the session also ended in the red. Light red in France (-0.26%) thanks to results well above expectations from Kering, which boosted the Luxury sector. Medium red for the DAX (-0.67%) and slightly brighter red for the SMI (-0.95%), burdened by Health.
Am I going to re-re-re-repeat what I wrote this week? Hmm, looks like so, not much choice. Changes in stock market indices have been inversely correlated to the VIX volatility index for several days, with the VIX itself evolving according to the declarations of the various camps on the situation at Ukraine’s borders. When the fear of a Russian invasion increases, nervousness rises and volatility dithers, while stock market indices fall. It happens when Americans say the Kremlin is lying or when Russian and Ukrainian propaganda media accuse each other of fueling the flames right or left. Conversely, the markets go up in the reverse pattern. When Moscow announces that it is moving its troops more eastwards or that a meeting to discuss de-escalation is announced.
Yesterday evening, the atmosphere was rather gloomy and rumors suggested that Russia was going to cross the Rubicon, which fueled the umpteenth stall in the technology sector in the United States. But overnight, the announcement of a meeting next week between the heads of diplomacy of Biden (Antony Blinken) and Putin (Sergei Lavrov) relaxed the atmosphere and propelled the night indicators on Wall Street into the green. These stormy markets are not recommended for investors prone to seasickness.
Apart from tensions in Eastern Europe, several other forces are at work to end the week. A new series of corporate results first, and quite good once again. Then, the discussions on the Iranian nuclear, which if they succeed could open the way to an increase in the supply of crude. It is this outlook that has deflated oil prices from recent peaks. In addition, monetary policy should not be forgotten with the countdown launched before the decision of the Fed on its rates in less than a month, on March 16th. Yesterday afternoon, St. Louis Fed boss James Bullard ruled that the institution may have to go beyond the neutral target interest rate level of 2% to fight inflation. His counterpart at the Cleveland Fed, Loretta Mester, for her part spoke out in favor of a rhythmic monetary tightening. Finally, on the third Friday of the month, there is the clearing session on the markets, known as the “three witches” in France or “triple witching hour” among Anglo-Saxons, when index futures and options and options on shares expire monthly. This is a source of additional volatility.
The leading indicators are positioned for a rebound after the news regarding Blinken and Lavrov. Information which however did not prevent the Asian places from being dominated by the fall, in particular Tokyo which lost 0.4% at the bell and which lost ground over the week.
Economic highlights of the day
At 4:00 p.m. in the United States, up to the January figures in old real estate and the Conference Board’s leading indicator index. Several American central bankers must also make speeches, but rather at the end of the day for the European markets.
The euro and the dollar still neutralize each other at 1.1364 USD, while gold rises to 1891 USD an ounce. On the oil market, the trend is rather downward, with Brent at 92.38 USD and WTI at 91.03 USD per barrel. The yield on US 10-year debt rose 2 points to 1.98% but remained close to its recent levels. Bitcoin is heckled at 40,650 USD.
The main changes in recommendations
- Alfen: Berenberg goes from holding to buying, aiming for EUR 88.
- Aluflexpack: Berenberg remains to be kept with a price target reduced from 37 to 23 CHF.
- Aveva: Berenberg remains long with a price target reduced from 4600 to 3550 GBp.
- Basilea: Research Partners goes from buy to hold, aiming for 45 CHF.
- Buzzi Unicem: Berenberg remains long with a target price reduced from 28 to 25 EUR.
- Kering: Jefferies remains to be kept with a price target raised from 770 to 800 EUR.
- L’Oréal: Barclays goes from underperformance to outperformance by targeting EUR 410.
- Nemetschek: Berenberg remains to be held with a price target reduced from 90 to 87 EUR.
- Neste Oyj: Berenberg remains to be held with a price target reduced from 56 to 50 EUR.
- Nestlé: RBC remains sector performance with a price target raised from 104 to 109 CHF.
- Sipef: Berenberg remains on the buy side with a price target raised from 61 to 70 EUR.
- Temenos: Baader Helvea goes from selling to reducing, aiming for 95 CHF.
- Tenaris: Jefferies remains to be kept with a price target raised from 11.50 to 12.50 EUR.
- Ubisoft: Berenberg remains to be kept with a price target reduced from 44 to 42 EUR.
- UCB: Berenberg remains long with a target price reduced from 124 to 122 EUR.
- Vifor: Berenberg remains to be kept with a price target raised from 116 to 167 CHF.
In France
Results of major companies
- Electricité de France: the group publishes its 2021 results, its 2023 objectives and announces disposals and a new capital increase of €2.5 billion.
- Gecina: the EPRA reconstitution NAV increased by 3.4% to EUR 193.50. Organic growth is expected around 3%. Recurring net earnings per share should increase by 5% on an adjusted basis, to EUR 5.50.
- Renault: alongside its 2021 results, the group is raising its 2022 margin forecast.
- Teleperformance: 2021 results are up sharply. The dividend is increased to EUR 3.30. Organic growth should reach 5% and the current Ebita margin will increase by 30 points this year.
- Ubisoft: revenues over nine months fell by 17.7% to €1.42 billion. The annual objectives for the year ending March are confirmed.
Important (and less important) announcements
- Saint-Gobain sells its distribution business specializing in tiles and its distribution brand specializing in plumbing, sanitary and heating in the United Kingdom.
- Paul Hermelin (Capgemini) joins Eurazeo as senior advisor.
- Patrick Bernasconi will succeed Didier Ridoret as Chairman of the Eiffel Tower Board of Directors.
- Xandres (Damartex) enters the German market.
- D&D International holds 87% of the capital and 92.5% of the voting rights of ST Dupont following the EUR 0.14 takeover bid.
- Gaztransport & Technigaz, Signaux Girod, Advini, Marie Brizard, Enogia, IT Link, Lisi, have published results and/or forecasts.
In the world
Results of major companies
- Allianz: operating profit is higher than expected in 2021. The group will take a charge of €3.7 billion because of the ongoing litigation surrounding its hedge fund AllianzGI US Structured Alpha.
- Sika: Ebit increases to CHF 1.39 billion in 2021 (consensus CHF 1.399 billion). Business growth should exceed 10% this year, with a rising margin.
Important announcements (and others)
- Celanese is about to buy DuPont’s mobility and materials unit for $10 billion, according to Bloomberg.
- NortonLifeLock delays closing of Avast takeover transaction.
- Tesla and Elon Musk accuse the SEC of harassment.
- The SEC is expanding its investigation into Activision Blizzard, according to the WSJ.
- The main publications of the day: Hermès, Deere, Allianz, ENI, Sika, Electricité de France, Natwest, Segro, Kingspan, Renault, Proximus, BE Semiconductor… The whole agenda here.
Readings
- Ikea throws itself on the last ancient forests of Europe (The New Republic, in English).
- Arnaud Lagardère gives his version of the takeover of his group by Bolloré (Le Monde).
- In Amsterdam, the inhabitants are fed up with “dark stores” (Wired, in English).
- Kevin Ingram, the black version of Gordon Gekko (Intelligencer, in English).
- Intel wants to stand out with chips dedicated to the automobile (Nikkei Asia, in English).
- The global rise of cryptocurrencies worries the G20 countries (Le Figaro).
- Russia / Ukraine, China / Taiwan, same fight? (The Spectator, in English).
- Jeff Bezos’ dream or can we really rejuvenate by reprogramming our cells? (The Conversation).
- Biden at the developer of the misery index in the United States (Project Syndicate, in English).