With the exception of European markets, stock markets posted a positive weekly performance last week, particularly in the United States and Japan, where equities continued to rise. Sector performances are much less clear-cut than in previous weeks: energy and technology led the rise, while the two sectors have been rather divergent since the start of the year. Commodities also rose. It is the most defensive sectors such as healthcare and utilities that bring up the rear.
The broad American S&P500 index is now only 4.7% behind its price at the end of 2021. It widened the gap last week on its European counterpart STOXX Europe 600, which shows a 2022 liability of 7% . Market determinants remain the war in Ukraine, shortages and the impact of the US central bank’s less generous monetary policy. A Fed that will take note this week of two important statistics: the PCE inflation for February (Thursday) and the employment figures for March (Friday). It seems clear that Jerome Powell and his horde of central bankers intend to step up their fight against inflation, trying not to derail economic momentum. The reaction of investors since the beginning of last week shows that they rather trust them, even if they give them a hard time for being late in reacting. I was going to say fair game, but you could hardly find a less fitting transition.
Because in Ukraine, the fighting is still raging and it is hard to see what could improve the situation. However, new information came to feed the debates. The Russian General Staff has declared that its troops will concentrate their efforts on the breakaway zone of Ukraine. Some have seen it as a sign that the Russian offensive is slipping. Others point out that there have not really been signs of relaxation in the other combat zones. Ukrainian President Volodymir Zelensky for his part confirmed that his country is ready to discuss neutrality on the international scene to allow the talks to move forward.
Joe Biden caused a lot of ink to flow yesterday afternoon, rightly or wrongly. After a very successful European tour according to those who know how to measure this kind of thing, the American president released a short sentence that caused a stir in the Landerneau, or rather in the Royal Palace in Warsaw: “For God’s sake, this man can’t stay in power“He was obviously talking about Vladimir Putin, not Kim Jong Un. Did he make a mistake by saying out loud what part of the world is thinking to himself? unleashed on Joe Biden’s propensity to communicate the substance of his thoughts in public, even when he shouldn’t. I admit that the debate seems a little excessive to me, and that it was probably amplified by the comic backpedaling of the White House’s army of communicators. But we seem to have been moved in high places by the consequences of Biden’s sentence: London and Paris have even cautiously distanced themselves. As if Putin was going to be more upset after that, when his American counterpart had just called him “Butcher” and of “war criminal“. We are still talking about it this morning everywhere in the press. The weight of words…
On the financial markets, it is the American bond which is very agitated this morning, with a continuation of the movement of sale, which pushes up the yields. The 10-year term is remunerated at 2.52% (+5 points), below the 2-year term which is posted at 2.62% (+9 points). The 5-year-old and the 30-year-old are tied at 2.62%, a first since 2006, apparently. Yield curve inversions are signals of economic caution. But especially between short rates and long rates, especially between 3 months and 10 years. The short term is currently still low, at 0.48%. Keep an eye on the approach of the two statistics mentioned above, because if the equity markets follow the Fed, the bond market seems to be playing a different role.
This morning, Tokyo and Shanghai are losing ground, while Hong Kong is progressing. Finally, note that the time difference with the United States has resumed its standard deviation since this weekend and the switch to summer time in Europe. The European leading indicators are light green around 8:00 am.
Economic highlights of the day
Only one statistic expected today, US wholesale inventories in February. The whole macro diary here.
The euro retreated to 1.09531 USD this morning. The ounce of gold loses some feathers around 1944 USD. Oil is relatively flat, with North Sea Brent at $117.50 and US WTI light crude at $110.50. The yield on American debt rose to 2.52% over 10 years, while German debt offered a coupon of 0.58% over the same duration and the French OAT went back over the 1% mark. Bitcoin is trading around 47,000 USD.
The main changes in recommendations
- Adecco: JP Morgan goes from neutral to underweight by targeting 42 CHF.
- Dassault Aviation: Berenberg remains on the buy side with a price target raised from 139 to 180 EUR.
- Deliveroo: Jefferies remains on the buy side with a reduced target from 435 to 240 GBp.
- Gecina: Societe Generale goes from holding to buying, aiming for EUR 134.
- Helvetia: Berenberg remains to be held with a price target reduced from 109 to 104 CHF.
- JCDecaux: Berenberg remains on the buy side with a price target reduced from 28 to 26.50 EUR.
- Knights Group: Berenberg remains to be held with a price target reduced from 410 to 165 GBp.
- MorphoSys: Berenberg resumes buying monitoring, targeting EUR 65.
- Nestlé: Jefferies remains underperforming with a target reduced from 110 to 100 CHF.
- Pharmagest: GreenSome Finance remains long with a target reduced from 124.80 to 112.70 EUR.
- Rational: Berenberg remains on the buy side with a reduced price target of 2180 to 1035 EUR
- Renault: Jefferies remains to be kept with a target reduced from 25 to 22 EUR.
- SKF: Jefferies remains to be retained with a target reduced from 182 to 165 SEK.
- Smurfit Kappa: Jefferies remains to be kept with a target reduced from 52.30 to 46.80 EUR.
- Unilever: Jefferies remains long with a target reduced from 4700 to 4130 GBp.
- Vicat: HSBC buys to keep, aiming for EUR 32.
- Vitesco: Berenberg remains to be kept with a target price reduced from 52 to 42 EUR.
In France
Important (and less important) announcements
- France plans, in partnership with TotalEnergies and GRTGaz (Engie), to install a new liquefied natural gas import terminal in the port of Le Havre, according to Les Echos.
- Axa ceases its investments in Russia.
- TotalEnergies will no longer invest in Russia, repeated CEO Patrick Pouyanné.
- Scopelec, a subcontractor of Orange, takes the telecom giant to court.
- Regeneron and Sanofi Present Latest Phase III Data on Dupixent at AAD’s 2022 Annual Meeting.
- The State will ask Orpea “several tens of millions of euros”. The group provided its answers in a detailed press release and the CEO is interviewed by Le Figaro.
- Pharmagest wants to rename itself Equasens.
- Olivier Delamea takes over the general management of Savencia.
- Europlasma takes over SATMA, a specialist in the production of aluminum anodes.
- The minority shareholders of the Société Marseillaise du Tunnel Prado-Carénage are still standing against the offer from Vinci and Eiffage.
- Pharmagest, NFL Biosciences and CS Group have published their accounts.
In the world
Important announcements (and others)
- The FCC adds Kaspersky, China Mobile and China Telecom to its list of threats.
- Temasek is reportedly campaigning for a replacement for Bayer CEO Werner Baumann, according to Bloomberg.
- The British government and Electricité de France will each acquire a 20% stake in the Sizewell C nuclear project.
- The second black box of the China Eastern Airlines B737 has been found.
- Meituan bounces back after his results.
- Macquarie takes a stake in the gas unit of National Grid.
- Daimler Truck CEO points to “perennially” high cost of electric vehicles without government subsidies.
- CVC could take a stake in the business subsidiary of Telecom Italia.
- Telenet sells its telecom towers to DigitalBridge for €745m.
- The BYD subsidiary will supply EV batteries to Xiaomi and NIO.
- CSL confirms its intentions to squeeze out and delist Vifor.
- Zurich Insurance has removed its logo marked with a Z from social networks, this letter having become in Russia a mark of support for the invasion of Ukraine by Moscow.
- The main publications of the day: Xpeng, Tsingtao Brewery, Pershing Square, Quadient… The whole agenda here.
Readings