The markets fell again yesterday, quite heavily even in the United States where the Nasdaq suffered a rare -4.22% at the close, weighed down by the plunge of Meta Platforms (ex-Facebook), which sank by 26%, signing the biggest capitalization carnage in history in a single session, about $200 billion evaporated. In the game of silly comparisons, this amounts to striking out Airbus and Schneider from the CAC40, or Novartis from the SMI. Or New Zealand’s GDP. Or to lower Mark Zuckerberg’s estimated fortune from $113 billion to $85 billion. Meta is one of the few false notes in the publications of technology companies in the United States, as demonstrated by the results published yesterday by Amazon, which are worth the title a somewhat delirious outbreak outside the session. Either I am getting older, or the movements are more and more brutal and erratic on stocks, even the biggest ones with stable valuation ratios.
But before returning to corporate news, a detour to central banks, which made headlines yesterday, at least after the Meta / Facebook debacle.
The monetary policy decisions of the Bank of England (a rate hike) and the ECB (nothing) were completely agreed. But the markets have vibrated a little at the speech of Christine Lagarde (I measure the full scope of this sentence, believe me). Basically, the boss of the ECB spoke of “risks to the inflation outlook on the upside“. It may be a detail for you, but for the markets it means a lot. It means that he was free, happy to be there despite everything that the ECB has pulled out of the boxes a turn of phrase that has been plastered for ten years. This implies above all that, like the Fed, the ECB is afraid / aware of being “behind the curve”, that is to say lagging behind in the fight against rising prices. To top it off, Christine refused to confirm that there will be no rate hike this year, which is a somewhat unexpected about-face. The only concession to this hardening of tone, the end of asset buybacks will be after the release of the monetary screwdriver. Any resemblance to the current situation on the other side of the Atlantic is not necessarily coincidental.
We go back down from the macroeconomic spheres to return to those of listed shares. A few words on the January rotation, or rather some numbers now that we have some data. Société Générale has determined that the correlation between the valuation of a sector and stock market performance has never been so high in Europe: 81%! The previous record, around 75%, dates back to mid-2013. There have only been eight rates above 50% in 20 years. More concretely, the bank found that all sectors with a PER 2022 below 12 rose, while all those with a PER 2022 above 20 fell. The perfect or almost perfect illustration of investors’ renewed appetite for “value”, or if you want a powerful current which means that Renault gained 14% in January while Apple lost 4%.
But within the same sector, an identical phenomenon was at work: the least valued securities generally rose and those with very high multiples were slashed. Example cited by Société Générale, health, where the 20% of the least valued companies (average PER of 11) gained around 4% on average, while the 20% best valued (average PER of 83) fell by 24%. Investors have clearly applied an earnings multiple filter to their arbitrages. Only the oil & gas, banking, insurance and aeronautics & defense sectors posted fairly homogeneous performances, which is probably also explained by a lesser disparity in valuations (except perhaps for aeronautics).
Today, the mood is rebounding. Markets are always plugged into alternating current. They are waiting for the employment figures for January in the United States, which I remind you are one of the key elements of the equation that the Fed is trying to solve. Oil continues to soar with a spread reduced to a minimum between Brent and WTI, a novelty that my colleague Jordan Dufee will explain to you in a paper published a little later this morning (Jordan, the pressure is clearly on you). The ECB bloodshed propelled the euro above USD 1.14.
In Asia, the Nikkei 225 is up 0.7%. The Hang Seng, which did not list for the week due to the Lunar New Year, gained 3%. Korea’s KOSPI gains 1.4% after a cut for the same reasons. Mainland China will not reopen until Monday. European leading indices are trending higher this morning. Investors are keeping an eye on the VIX volatility index, which has risen for the second consecutive day without yet reaching the levels of the end of January.
Economic highlights of the day
Only one major meeting today, data on employment in the United States in January, at 2:30 p.m.
The ECB’s outburst propelled the euro to 1.1463 USD. The ounce of gold vegetates at 1806 USD while oil is stronger than ever, with Brent at 91.42 USD and WTI at 90.807 USD. The yield on US 10-year debt recovered several points yesterday, to settle at 1.85%. Bitcoin is holding strong at $37,739.
The main changes in recommendations
- Boliden: Handelsbanken goes from buy to hold, targeting 410 SEK.
- Bonduelle: Midcap Partners remains to be retained with a reduced target of EUR 21.30 to EUR 19.20.
- Carrefour: Jefferies remains on the buy side with a target raised from 20 to 21.75 EUR.
- Dassault Systèmes: Jefferies remains to be kept with a target reduced from 47 to 44 EUR.
- Essity: Societe Generale goes from holding to buying, targeting 327 SEK.
- Flatexdegiro: Exane BNP Paribas starts tracking outperformance by targeting EUR 29.
- Givaudan: UBS reduces its target price from 4580 to 4050 CHF.
- HeidelbergCement: Berenberg remains long with a price target reduced from 90 to 72 EUR.
- Henkel: Credit Suisse resumes neutral tracking targeting EUR 80.
- Holcim: Berenberg goes from holding to selling, aiming for 43 CHF.
- ID Logistics: Berenberg remains on the buy side with a price target raised from 360 to 375 EUR.
- Kinnevik: DNB goes from hold to buy aiming at 320 SEK.
- Mercialys: Goldman Sachs goes from buying to neutral, targeting EUR 10.40.
- Rational: HSBC goes from reducing to keeping, aiming for 760 EUR.
- Sanlorenzo: Berenberg remains long with a target price raised from 41.50 to 44 EUR.
- Siemens Gamesa: JP Morgan moves from online weight to underweight by targeting EUR 16.
In France
Company results
- Bonduelle: half-year revenues reached €1,442 billion and are in line with expectations, according to management.
- Sanofi: the group is aiming for growth in the low double-digit zone for its earnings per share this year, excluding currency.
- Vinci: results up sharply. 2022 earnings are expected to exceed 2019 earnings.
Important (and less important) announcements
- Agreement between Stellantis and the unions on more than 700 voluntary redundancies.
- ArcelorMittal will convert three blast furnaces to invest in green steel in France.
- Total Eren (TotalEnergies) and Chariot will develop a solar PV project for the Tharisa mine in South Africa.
- Saint-Gobain sells its glass processing business in Estonia.
- In the United States, Air Liquide will build its largest biomethane production unit in the world.
- Vinci will renew Xavier Huillard as CEO before separating his functions.
- ID Logistics will recruit 1,000 people this year.
- Valneva and Pfizer announce new positive Phase 2 data for their Lyme disease vaccine candidate.
- Assystem is investing $5 million in a training program for female engineers.
- Quadient boasts a record year for its high-end mail processing solutions.
- Theranexus and the BBDF foundation initiate recruitment for the phase I/II study in Batten disease.
- Akka contributes to strengthening the management of physical cybersecurity for European critical infrastructures.
- Marie Brizard has convened her Social and Economic Committee with a view to eliminating 29 posts.
- LNA Santé, Tikehau, Cofidur, Linedata, Metabolic Explorer, Jacques Bogart, NRJ, Obiz, have published their accounts.
In the world
Company results:
- Amazon: after losing 8% yesterday with the Nasdaq, the title regained 14% off session after its results.
- Assa Abloy: Locksmith exceeds expectations in Q4.
- Enel: the objectives have been achieved with an increase in annual profits.
- Ford: the title loses 4% out of session after the publication of the quarterly.
- Snap: the title resumed 60% off session after stronger forecasts than expected, while it had lost 23% yesterday.
Important announcements (and others)
- Record for Meta Platforms: by losing 26%, the title sets the record for the largest destruction of capitalization in history in a single session.
- Merck expects sales of the COVID-19 pill to reach $6 billion in 2022.
- Intesa wants to distribute €22 billion to its shareholders over 2021/2025.
- Nike sues StockX for the sale of sneaker NFTs.
- Credit Suisse withdraws from nine African states.
- The British public liquidator is suing the auditing firm KPMG for failing to fulfill its obligations in the bankruptcy of the construction group Carillion, and is asking for compensation of £1.3 billion.
- Main results publications : Bristol-Myers Squibb, Sanofi, Regeneron, Air Products, Vinci, Aon, Assa Abloy, Carlsberg, Suzuki… Find the full agenda for the day here.
Readings