In Europe, stock market indices have developed a curious capacity to resist bad news recently, especially compared to their American counterparts. No matter how hard I scratch my head, I see little good reason to explain this phenomenon given the current distribution of risk. Oh yes, maybe one, the valuation lag. According to AlphaValue, the average PER of the European equities monitored by the research office – around 450 securities – is 14.5 times the results expected in 2022. Excluding concessions, still too little recovered from the crisis, the PER ranges from 6, 4 times for automotive to 32.8 times for software. In the United States, the average PER of S&P500 companies is 19.4 times expected earnings this year, or a third more on average than for the old continent. This ratio reaches 18 times for the Dow Jones, an index in which technology is rather under-represented, and 25 times for the Nasdaq, on the contrary rich in stocks of the digital economy, which the market is ready to pay much more. .
Historically, the American market is better valued than the European market, but the discrepancies had reached unprecedented levels because of the multiples granted to certain companies in the making, with an uncertain economic model but which were all sold as the next Apple or the future Tesla. Investors, less inclined to take risks in recent months, have lightened their positions on this kind of promising but too quickly praised companies. I illustrate this again with the ARK Innovation fund of the high priestess of venture investment Cathie Wood, for the moment demoted to the rank of abbess, whose losses have exceeded 60% over one year since yesterday. Wood may be right to bet on these issues, but financial graveyards are filled with investors who were right too soon or too late.
Coming back to our valuation questions, the recent corrections have erased some of the exuberance that had taken hold of certain parts of the market and which made good connoisseurs say that there was not necessarily a global bubble. on assets, but localized bubbles here and there. Of course, the American market is still better valued than the European market, but the gap has tended to narrow. And then given the current pressures on the economy of the old continent, confronted with the war in Ukraine and its consequences, in particular energy, it is not illogical that Wall Street is doing better than London, Paris or Frankfurt. Paradoxically, and this has been quite visible for the past few days, the American indices are more chaotic than the others. There are two major explanations for this. First, the proximity of a major monetary tightening by the Fed, which should act next week. Then, the weight of technology stocks in the S&P500, which penalizes the index as it favored it for years after the financial crisis of 2008.
Yesterday, Wall Street ended around equilibrium, but the Nasdaq still lost 0.05%, a sign that investors are still reluctant to get back on the stars of the American rating. Even the takeover of Twitter by Elon Musk did not make it possible to put parts back into the machine while the markets love big acquisitions in normal times, a fortiori in “tech”. Last night, the results of Meta Platforms (ex-Facebook) excited investors, with a title that gained 18% outside the session. In reality, the figures are not exceptional but the title has been so mixed in recent months that the financiers will try to buy it cheaply. For once, the action is worth barely 14.3 times the expected results in 2022, which makes it almost a European value. To give you an idea, 14.3 times is Vinci’s PER 2022.
The day will still be marked by corporate publications, which fall by the dozens and of which you can find some elements in the following lines, with the maximum completeness of which I am capable shortly after waking up. Sanofi, TotalEnergies, Unilever, Barclays or Nokia this morning in Europe, before the last two American digital giants, Apple and Amazon, after the closing in the United States this evening. Overall, results are still up, boosted by price increases. In addition, the markets will learn at 2:30 p.m. of the first estimate of US GDP for the 1er quarter of 2022. In the rest of the news, the Anglo-Saxon press talks a lot about the legal consequences of the Archegos scandal. There is a certain cacophony in Europe on the attitude to adopt towards Russia, because the countries which played the collective game by refusing to pay their gas bill in rubles have been punished by the cessation of deliveries, while others agreed to use Russian currency and were delivered. This obviously creates a breach in the common front that the EU is trying to build. However, there is still talk of a halt to Russian oil purchases.
The markets seem to be waking up in good spirits in Europe this morning. The leading indicators were bright red when I started writing at dawn, they are now well settled in the green. The trend is positive in Asia Pacific, with an increase of around 1.5% at the end of the course for the Japanese Nikkei 225 and gains of around 0.6% for the Hang Seng in Hong Kong. The CAC40 gained 1.1% to 6516 points at the opening.
Economic highlights of the day
Germany will publish its first inflation estimate for April at 2:00 p.m. In the United States, place for the first reading of the American GDP of the 1er quarter and weekly jobless claims, at 2:30 p.m. All the “macro” agenda here. This morning, the Japanese central bank maintained the course of an accommodating support policy, which is helping to push the yen down.
The dollar keeps the euro under pressure, at 1.0510 USD. The ounce of gold continues to decline to 1877 USD. Oil remains rather firm, with Brent from the North Sea at 103.50 USD a barrel and US light crude WTI at 100.60 USD. The yield on US 10-year debt picked up a few points to 2.83%. Bitcoin regains some ground at $39,400.
The main changes in recommendations
- Air Liquide: Jefferies remains long with a target raised from 183 to 185 EUR.
- Allianz: Goldman Sachs resumes buying monitoring, targeting EUR 270.
- Aveva: Jefferies remains underperforming with a price target reduced from 2000 to 1630 GBp.
- Coca-Cola Europacific Partners: Jefferies is still buying with a price target raised from 54 to 56 EUR.
- Dassault Systèmes: Jefferies remains to be kept with a price target reduced from 44 to 40 EUR. Barclays moves from lineweight to overweight by targeting EUR 48.
- Elementis: Jefferies remains long with a reduced target price of 170 to 160 GBp.
- Essity: Jefferies remains to be kept with a price target raised from 233 to 244 SEK.
- Grainger: Citigroup goes from neutral to buy, targeting 369 GBp.
- Holcim: Deutsche Bank goes from buying to holding, aiming for CHF 53.
- Inficon: Baader Helvea goes from reducing to accumulating by targeting 1037 CHF.
- Ipsen: JPMorgan raises its target price from 88 to 91 EUR.
- Kemira: Inderes goes from reducing to accumulating by aiming for 13 EUR.
- Puma: JPMorgan remains overweight with a target reduced from 115 to 110 EUR.
- Schneider: Morgan Stanley lowers its target price from 160 to 157 EUR.
- Thule: Handelsbanken goes from keeping to buying.
- Valeo: Berenberg remains on the buy side with a target reduced from 25 to 23 EUR.
- Valmet: Inderes goes from accumulating to buying, aiming for 32 EUR.
- Wienerberger: Deutsche Bank goes from buying to holding, aiming for EUR 30.
- Zurich Insurance: Goldman Sachs resumes neutral tracking, targeting CHF 510.
In France
Company results
- Capgemini: strong organic growth of 17.7% in Q1. The objectives are reiterated.
- Pernod Ricard: fiscal Q3 is up 20% organically. Over the financial year, current operating profit should increase by 17%.
- Sanofi: Q1 earnings per share are above expectations.
- Soitec: the group raises its margin forecast after record sales in fiscal Q4.
- Thales: the objectives are confirmed after organic growth of 2.7% in Q1.
- TotalEnergies: Q1 EBITDA more than doubled. The group had to take a depreciation of $4.1 billion on its Russian assets.
- Unibail: 2022 recurring net profit forecasts are confirmed.
Important (and less important) announcements
- Optical networks victims of sabotage in France.
- TotalEnergies recorded in its accounts for the first quarter of 2022 a provision of $4.1 billion for Russia.
- The capitalization of Airbus exceeds for the first time that of The Boeing Company.
- Crédit Agricole sells its stake in Crédit du Maroc.
- KKR will buy Albioma at 50 EUR per share plus 0.84 EUR dividend.
- AB Science will continue its phase II with masitinib combined with isoquercetin, but only in patients with moderate covid.
- Dolphins issues new OCABSAs.
- Klépierre, Seb, Wendel, Eramet, Imerys, Coface, Lectra, Nexity, Synergie, Mersen, Cogelec, Nicox, Prodware, TXcorpSRP Group, EOS Imaging, Alan Allman, Methanor, Pizzorno Group, AirwellGevelot, Klarsen, Enertime, MDXHealth, Don’t Nod, Tarkett, Solutions 30, Stef, TF1, X-Fab, have published their accounts.
In the world
Company results
- Amgen: the title drops by 6% after the close, in the wake of disappointing results.
- Beiersdorf: shortages have caused a lowering of the forecast.
- Ford: Stock gains about 2% off session after Q1 results.
- Meta Platforms shares surge 18% after the close on the back of its higher-than-expected quarterly results, thanks to reassuring user numbers and despite lower-than-expected revenue.
- Nokia: Q1 results are a bit higher than expected, benefiting from 5G rollouts.
- PayPal: the title resumed 3.4% off session after its quarterly.
- Qualcomm: good post-session reception to the results, with a title up 6.3%.
- Samsung Electronics: jump in net profit in the 1st quarter.
- Standard Chartered: the results of the British bank exceed expectations. The title rose 12% in session in Hong Kong.
- Unilever: the group exceeded sales forecasts for the first quarter, thanks to price increases of more than 8% to offset rising costs.
- Volvo Car: Quarterly earnings beat expectations despite shortages.
Important announcements (and others)
- Elon Musk is causing a scandal again by publicly criticizing Twitter executives.
- Schweiter takes a minority stake in the Swedish Swedboard.
- Thoma Bravo is eyeing Temenos, according to Bloomberg.
- Vifor’s Kapruvia approved by the European Commission.
- Main results publications of the day: Apple, Amazon, Samsung Electronics, Mastercard, Eli Lilly, Merck, Thermo Fisher, McDonald’s, Sanofi, TotalEnergies, Unilever, Glencore… The whole agenda here.
Readings