Volatility has gone down a notch on the European equity markets this week, as shown by the recent evolution of the EURO STOXX 50, whose variations have never exceeded 0.5% over the last three sessions. The level of wait-and-see attitude has risen at the same time as questions about the future direction of monetary policies. And it will be discussed today, monetary policy, with the April meeting of the ECB, which is not in a very comfortable situation. Inflation is rising strongly on the old continent – how could it be otherwise – and rates are still at rock bottom. We will see at the beginning of the afternoon how the Frankfurt bank intends to get out of it.
Yesterday on Wall Street, technology stocks and cyclical consumption sounded the revolt. The Nasdaq 100 was able to halt the bleeding of three sharp declines on a 2% rebound. All of the large caps in the index rallied between 1 (for Meta Platforms) and 3.5% (for Tesla). Only 8 drops out of 100 stocks. The easing on bond yields helped. The very slight dip observed in inflation excluding volatile products in the United States in March slightly reduced expectations for the level of medium-term interest rates. The US wake-up call has fueled the continued rally in Asian equities and is contributing to a surge of wake-up optimism in Europe.
To end the week (financiers observe the Easter weekend all over the world), I address the question of loss aversion according to age, after reading a very interesting article. It is taken from the writings of the indefatigable Joachim Klement, who still annoys me to the core for his ability to come up with fresh new ideas on a daily basis, while I row dumbly stare out the window trying to find a topic to distract you a little. Come on, to cheer me up I think he might have an army of little hands helping him out before sunrise. Whereas I have to wait until 8 am to see my first colleague arrive, the almost always punctual Eduardo. And again, the good days.
But back to the expiry date of the investor. Any saver profiling questionnaire will tell you that risky investing (stocks) is for the young and no-gain investing (bonds and euro funds) is fine for the old. It’s schematic and a tad provocative, but that’s a bit of it. In reality, we all have variable risk appetites. And our resistance to losses also fluctuates. A very cautious individual who goes into PLS as soon as a line in his portfolio turns red has no interest in buying GameStop shares or Dogecoin, because his life will quickly become hell. A good advisor will be able to appreciate this dimension while adding the usual variables: income, savings objective, personal needs, assets, etc.
But the question of age is not as binary as is generally thought, according to a study presented by Klement, carried out among 4,000 Britons by David Blake and his team, who officiate at the City University of London. We discover that loss aversion is not the prerogative of the oldest. Finally, let’s say that the over 65s are the most anxious about losses, but they are not the only ones. This is also the case for 18-24 year olds, in fairly similar proportions. If you think about it a bit, it makes a lot of sense. At that age, unless of course you are a rich heir or have sniffed out the right plan for cryptocurrencies before the others, you are penniless: you are therefore more afraid of losing the little you have. The people who have the most phlegm in the face of losses are the 35/44 year olds, followed by the 45/54 year olds. These are more likely to be financially in place and to have developed a better understanding of financial matters. Aversion only rises in significant proportions as retirement approaches (be careful, this age is changing between the two rounds in France). Morality, the youngest often have an appetite for risk but much less for losses. To understand the biases we suffer and avoid falling into classic traps, there’s nothing like a short training session with Xavier Delmas’ Zonebourse educational videos on behavioral finance.
Young investors shouldn’t develop too much stress this morning, as European leading indicators are heading for a rebound. In the absence of developments in the conflict in Ukraine, even if the West has planned to continue to arm Kyiv, the attention of the markets will focus, as I said above, on the ECB. Financial centers have also received a boost from China, where the authorities have heavily hinted that an easing will take place on rates and the level of bank reserve requirements tomorrow Friday, to counter the negative effects of containment measures. taken all over the country in the face of a new wave of coronavirus. The CAC40 gained 0.27% to 6562 points shortly after opening.
Economic highlights of the day
The ECB will announce its monetary policy decision at 1:45 p.m., before the presentation conference takes place at 2:30 p.m. It is also at this time that the weekly jobless claims and retail sales will appear in the United States, before the University of Michigan consumer confidence index and business stocks at 4 p.m. The whole macro diary here.
The euro rises to 1.0908 USD. The ounce of gold remains firm at 1973 USD. Oil continues to rise with Brent from the North Sea at 108.20 USD per barrel and US light crude WTI at 103.7 USD. The yield on US 10-year debt continues to decline to 2.67%. Bitcoin recovers to 41,300 USD each.
The main changes in recommendations
- Adyen: Piper Sandler starts the overweight follow-up targeting EUR 1810.
- Amundi: Societe Generale is still buying with an adjusted objective of EUR 75.
- Bunzl: Berenberg switches from buying to holding, aiming for 2950 GBp.
- Deutsche Post: JPMorgan remains overweight with a reduced target from 62.40 to 59.80 EUR.
- Galp Energia: Goldman Sachs goes from buying to neutral, targeting EUR 15.
- Hapag-Lloyd: JPMorgan remains underweight with a target raised from 165 to 170 EUR.
- Husqvarna: DNB goes from sell to hold aiming for 95 SEK.
- Nexi: AlphaValue remains long with a reduced target price of 14.90 to 12.20 EUR.
- Novo Nordisk: Berenberg remains to be kept with a price target raised from 585 to 780 DKK.
- Pearson: Morgan Stanley resumes online weighted tracking, targeting 750 GBp.
- Telefonica Deutschland: Jefferies remains to be kept with a price target raised from 2.32 to 2.53 EUR.
In France
Important (and less important) announcements
- Hermès generated 33% organic growth in the 1er quarter and confirms its objectives.
- Stellantis “takes note” of the return of the advisory vote on its CEO compensation report, 52.1% unfavorable, and “will explain in the 2022 Compensation Report how this vote was taken into account”.
- Publicis posted strong organic growth in Q1, which allows it to aim for the top of its annual target range.
- TotalEnergies Collaborates with ENEOS to Develop Sustainable Aviation Fuel Production at Negishi Refinery
- Crédit Agricole has told Rome it has no plans to take control of Banco BPM, according to Reuters.
- ArcelorMittal is to acquire 80% of an American plant from Voestalpine, valued at $1 billion.
- Sanofi has obtained positive results for a phase I/II study evaluating rilzabrutinib for the treatment of immune thrombocytopenia (ITP) in adults.
- Vivendi will launch its takeover bid for Lagardère today.
- Alstom signs a contract worth more than €200 million with Dallas-Fort Worth airport.
- Vinci and Eiffage launch their simplified takeover bid for the Société Marseillaise du Tunnel Prado-Carénage after the green light from the AMF.
- Neoen launches an innovative virtual battery service, and signs a first 70 MW contract with AGL Energy.
- OVH raises its annual revenue forecast after the publication of its data for 1er fiscal semester.
- The British Medicines Agency validates Valneva’s covid vaccine.
- Eurobio Scientific obtains CE marking for the new proprietary test for the detection of Omicron BA.x, BA.2 and Delta variants of SARS-CoV-2.
- Deezer is close to an agreement to merge with Spac I2PO.
- BOA Concept completes a €6 million private placement.
- Visiomed Group terminates its OCABSA financing contract.
- Catana, Keyrus, i2S, Medesis, Hopium, Pharmasimple, OBIZ, Safe, have published their accounts.
In the world
Important announcements (and others)
- Blackstone-Edizione’s takeover bid values Atlantia at €48 billion, or €23 per share.
- Ericsson under Q1 earnings consensus.
- Taiwan Semiconductor’s quarterly earnings are higher than expected.
- Rostec is eyeing Mercedes’ stake in Kamaz. In addition, the German group ran a prototype electric car for 1,000 km without recharging.
- Meta Platforms will take 50% of creator earnings on its platform from the metaverse.
- Nexo and Mastercard launch the world’s “first” crypto payment card.
- Petrobras has a new board of directors to appoint its boss.
- Uniti Group is backing the AUD 5 per share buyout offer for it.
- The headquarters of Nestlé France searched as part of the Buitoni affair.
- Swiss Re announces a solvency ratio of 223%.
- Activist investor Blackwells criticizes Peloton’s new CEO after pushing the previous one out.
- Main results publications: UnitedHealth, Wells Fargo, Morgan Stanley, Hermès, Goldman Sachs, Citigroup, Fast Retailing, Ericsson, VAT Group, OVH, Virbac… The full agenda here.
Readings