Wall Street has also regained altitude, thanks to the pulling force of its heavyweights. Two converging phenomena enabled the American indices to recover between 1.5 and 2%. First the “surprise of the chief”, the raising of the forecasts of JPMorgan Chase during an investor day. The first American bank explained that it would benefit from higher than expected net interest income, while maintaining a very solid level of profitability of its capital. The action ended up 6.2%, dragging the entire banking sector in its wake, particularly Goldman Sachs, the second largest weighting in the Dow Jones. I remind you that the oldest American index works on an obsolete principle which consists of taking into account the price of a share and not its market capitalization. Thus Goldman Sachs, which quotes 316 USD for a capitalization of 100 billion dollars, weighs 2.2 times more than Apple, while the Apple brand capitalizes 2,226 billion dollars, or 22 times more. This is because Apple stock is only worth $143. The Dow Jones gained nearly 2% at the close.
Technology stocks, Apple precisely (+4%) were not left out. With Microsoft (+2.3%), they allowed the Nasdaq 100 to gain 1.68%. The technology index has therefore progressed less than the old Dow Jones. This is mainly because investors still shun some of the stocks deemed too risky: why buy Roku when you can have Apple at less than 25 times earnings? Post-closing in the United States, the heart of the markets balances between the poor results of Snap (whose title sinks by 31% off-session) and the good results of Zoom Video Communications (+4%).
The curious banking / big tech hitch has taken precedence over the tensions arising from Joe Biden’s statements on US military support for Taiwan in the event that China goes on the offensive. The American media do not hesitate to speak of a gaffe by their president. The White House later backpedaled by pointing out that Biden was talking about Ukraine-type support. It is Beijing that must have fun with Western convolutions.
Finally having fun is easy to say, because the Chinese Communist Party has to face an economic situation complicated by the confinements decided within the framework of the zero-covid policy. To respond to this, a series of measures were announced last night, including tax credits, payment facilities for provident organizations and investment plans. Investors continue to wonder why Beijing is satisfied with successive small announcements instead of a good big stimulus package, but they know how to be satisfied with little at the moment. Despite everything, we remain in the absolute and permanent paradox of financiers who are crying out for less regulation but who are begging for public assistance as soon as things get a bit swaying.
On the day’s session, we will have to follow the PMI indicators of the major economies, to see if inflation and the anxiety-provoking economic news that abound in our media are weighing on the morale of purchasing managers in companies, and to what extent. The statistics published at 4:00 p.m. in the United States on new real estate will show whether the monetary tightening that has started in the United States is having an impact on this market. In the evening, Fed boss Jerome Powell and ECB chief Christine Lagarde are due to deliver speeches at separate events. If we now know more or less what the American central bank has in mind, the spotlight may turn on Lagarde and on the decisive choices that will be made in the weeks to come in Europe in terms of rates and reductions. of the asset buyback program. In view of the proliferation of small spades launched in the European monetary landernau lately, we feel that positions are at loggerheads within the institution, which does not really help to improve visibility on decisions.
The mood in the morning, and you will excuse me for this trivial description, is Snap versus China. The US tech company issued a very poor outlook after the close, which sent the stock tumbling down 30% and weighing on US leading indicators. Opposite, and I spoke about it a little earlier, investors are looking favorably on the support measures announced by Beijing. In a normal world, these two pieces of information should not have the same weight. But in modern day equity markets, it may be, at least briefly. As a result, Asia-Pacific stock markets are down this morning. And the available indicators point to a bearish opening in Europe, in average proportions at the time of writing.
Economic highlights of the day
Return of the PMI indices – which measure the optimism of purchasing managers, for the May batch for the main economies. In the United States, there will also be the Richmond Fed index and new housing figures (4:00 p.m.). Jerome Powell and Christine Lagarde are due to deliver speeches at two separate events, but this will take place after the European close. The whole macro diary here.
The euro continues its ascent to 1.0673 USD. The ounce of gold stabilizes around 1854 USD. Oil remains firm, with North Sea Brent at $112.72 a barrel and US WTI light crude at $109.70. The yield on US 10-year debt stood at 2.83%, almost unchanged. Bitcoin is trading around 29,250 USD.
The main changes in recommendations
- ABN Amro: Berenberg remains short with a target of reduced from 10 to 9.50 EUR.
- Commerzbank: Societe Generale goes from holding to buying, aiming for EUR 9.
- Compagnie Financière Richemont: Jefferies remains long with a price target reduced from 140 to 125 CHF. Bank of America remains long with a reduced target price of 175 to 170 CHF.
- Dätwyler: Credit Suisse goes from outperformance to neutral by targeting CHF 249.
- Deutsche EuroShop: HSBC goes from buy to hold targeting EUR 22.50.
- Fortum: Berenberg remains in charge with a target price reduced from 30 to 21.50 EUR.
- Glencore: Julius Bär remains to be kept with a price target raised from 480 to 500 GBp.
- Hellenic Petroleum: AlphaValue goes from reducing to accumulating, targeting EUR 8.32.
- Idorsia: Citigroup remains on the buy side with a target price raised from 25 to 33 CHF.
- Kingfisher: Societe Generale switches from selling to holding, targeting 271 GBp.
- Moonpig: Jefferies remains long with a price target raised from 410 to 430 GBp.
- Mowi: Berenberg remains to be kept with a price target raised from 235 to 245 NOK.
- Prosus: Barclays goes from overweight to weighted online by targeting EUR 54.90.
- Scor: Jefferies remains to be kept with a price target reduced from 28.50 to 26.50 EUR.
- SFS: UBS goes from buy to hold, aiming for CHF 115.
- Uniper: Berenberg remains to be kept with a price target reduced from 32 to 24 EUR.
- Vesuvius: Berenberg remains long with a price target reduced from 600 to 480 GBp.
In France
Important (and less important) announcements
- Production delays hit CFM (Safran/General Electric), impacting Airbus, according to Reuters.
- Stellantis and Samsung SDI will build a new JV battery plant in Indiana.
- The name of the next CEO of Société Générale will be announced in the fall.
- TotalEnergies signs an LNG sales contract with the Korean company Hanwha Corporation.
- Thales Alenia Space, partner of OHB System, reaches a major milestone in the development of Copernicus CO2M satellites.
- Air France-KLM is launching a €2.3 billion capital increase supported by France, the Netherlands and CMA CGM.
- Elogen (Gaztransport & Technigaz) and HIFraser are joining forces for the production of green hydrogen in Australia & New Zealand.
- Visiativ is growing in Germany.
- Esker strengthens its partnership with Grant Thornton France.
- Uniti raises €8 million as part of its capital increase at €2.85 per share.
- Gour Medical has published its accounts.
In the world
Company results
- Snap: the action sinks by 31% post-session after disappointing quarterly results.
- Zoom Video: the action jumped 17% out of session after quarterly better than expected.
Important (and less important) announcements
- Broadcom could pay around $140 per share for VMWare, according to the Wall Street Journal.
- Samsung is going to invest $356 billion over five years in strategic sectors such as semiconductors and biotechnology.
- Nestlé’s Health Science division acquires Brazilian organic, natural and plant-based food manufacturer Puravida.
- In Brazil, Bolsonaro sacked a 3and boss of Petrobras in a year. José Mauro Coelho was appointed only 40 days ago.
- According to CNBC, Airbnb is expected to cease operations in mainland China.
- Rakuten wants to list Rakuten Securities on the stock exchange.
- Roche enters into a partnership with biotech Kalivir Immunotherapeutics.
- Starbucks leaves Russia.
- Dufry extends the concession with Heathrow airport.
- Deutsche Lufthansa and MSC are said to be leading the bid race for Italian company ITA Airways.
- Aegon will sell its 50% stake in its joint venture with Liberbank to Unicaja.
- Toyota will cut its global production plan by 100,000 units in June.
- Dexcom has its sights set on Insulet, according to Bloomberg.
- Medmix is continuing the appeal against the closure of its Polish site.
- Calida completes the takeover of Cosabella.
- Klarna will lay off around 10% of its 7,000 employees, Swedish business daily Dagens Industri reported on Monday.
- Main results publications of the day: Intuit, Netease, Agilent, Adevinta, Ralph Lauren, CTS Eventim, Derichebourg… The whole agenda here.
Readings