If I had gone skiing yesterday instead of following the stock market session, I would probably have realized that something was wrong while looking at the CAC40 charts at the close, while sipping a mulled wine. Orange, the biggest increase in the index. Wow! Orange, only increase in the index. Wow! CAC40? -3.97%. DAX? -3.8%. Even the Swiss SMI tasted: -3.84%. It would have certainly deserved a little genepi to get it all across.
Returning to the writing of Zonebourse, I would surely have found Laurent 2 in PLS repeating over and over that cryptocurrencies would quickly rebound on their support. Tommy would probably have been laying a wreath and a candle in front of Cathie Wood’s photo. Laurent 1 would have been gloating in his corner watching his bearish positions flashing in neon green. Eduardo would have texted me to tell me that he would arrive a little late. As for Roxane, she would have asked “do you think it is in my interest to take advantage of this to open a PEA?“while Etienne would have repeated in a loop”it’s insane“and that Victor would have added”have you seen the action of Olympique Lyonnais, it is outperforming“. Finally, Romain would probably have laughed at us with his American indices in the green at the close.
Because Wall Street, after hitting bottom, climbed back up to finish at the highest of the day. The last stand in technology and cyclical stocks allowed the S&P500 to end up +0.28% and the Nasdaq 100 to gain 0.49%. A Nasdaq 100 which had lost almost 5% at the worst of the session. This is to say the reversal of the situation. The VIX volatility index gives us a small return on the 30 points, as at the beginning of last December. The multi-hundred-billion-dollar question is obviously whether the purge is over or whether yesterday’s session is just a jolt in a downward trend that will continue. Only one thing is certain, nervousness has gone up a notch on the markets and we have entered a fairly classic phase of heightened uncertainty.
In the very short term, it is the decision that the American central bank must take on Wednesday on its monetary policy that is creating a stir. The CME’s FedWatch tool predicts the Fed will hike rates by a quarter point for the first time after its March 15-16 meeting. That of January 25 and 26 is just supposed to prepare the ground. Very few economists expect stronger action tomorrow. But that doesn’t stop rumors from circulating. Or some contrarian spirits to call for vigorous and unexpected action, which would contrast with the so predictable monetary policy of recent years, but which would send a strong message in the fight against inflation.
Conversely, I have also read comments urging the central bank to ease off on the pretext that it risks derailing stock markets. Should the Fed backtrack because stocks are crashing? Of course not, that’s not his role, despite appearances. It is investors’ doubts about the intentions of Jerome Powell and his team, the risks of missteps by the Fed, which took too long to react, and parallel hazards such as the Ukrainian crisis or the valuation of certain assets which contribute to fueling the current volatility. For the record, I remind you, as I did yesterday, that rate hike cycles are generally beneficial to equities and that long-term investing does not consist of entering and exiting positions every four mornings to try to anticipate the direction of the wind. It is sometimes necessary to know how to arch the back, even if certain passes are painful for the actions.
In the meantime, the European markets will rebound this morning at the opening, after their heavy fall the day before, but all this remains very fragile. In Asia, the red is put in spite of the burst of Wall Street. Tokyo lost 1.8%, Hong Kong 1.6% and Sydney 2.5% at the time of writing.
NB: The small bears in the illustration symbolize the fall, as opposed to the bull, symbol of the rise.
Economic highlights of the day
The German Ifo institute will publish its business climate indicator across the Rhine at 10 a.m. In the United States, the FHFA house price index for November (3:00 p.m.), the Conference Board consumer confidence index for January (4:00 p.m.) and the Richmond Fed manufacturing index for January (4:00 p.m.) are in the program. This morning, South Korea reported Q4 GDP growth marginally above expectations.
The euro is firm at 1.13139 USD. The ounce of gold goes back to 1842 USD. Oil fell to USD 86.66 for Brent and USD 83.56 for WTI. The T-Bond is posting a return of 1.75% over 10 years (-1 points), while the Bund is posting -0.11% (-4 points). Bitcoin loses 2% to $36,000.
The main changes in recommendations
- Air France-KLM: Berenberg remains on sale with a price target reduced from 3.60 to 3.25 EUR.
- Amundi: Credit Suisse starts tracking at neutral targeting EUR 78.
- BNP Paribas: Jefferies is still buying with a price target raised from 72 to 79 EUR.
- Crédit Agricole: Jefferies is still buying with a price target raised from 16.10 to 17.50 EUR.
- Encavis: Stifel goes from holding to buying, targeting EUR 20.80.
- Genmab: DNB goes from hold to buy targeting 2950 DKK.
- Inficon: Berenberg remains long with a price target raised from 1480 to 1500 CHF.
- Novartis: Liberum goes from buy to hold, aiming for CHF 87.
- Novo Nordisk: Liberum goes from holding to selling aiming for 570 DKK.
- Orsted: RBC goes from outperformance to sector performance by targeting 800 DKK.
- Publicis: Oddo BHF goes from neutral to outperformance by targeting EUR 70.50.
- Roche: Roma are still to be kept with a price target raised from 325 to 388 CHF.
- Sanofi: Liberum goes from holding to buying, targeting EUR 109.
- Societe Generale: Jefferies is still buying with a price target raised from 42 to 48 EUR.
- Standard Chartered: Jefferies remains long with a price target raised from 794 to 855 GBp.
- Symrise: Jefferies remains long with a price target raised from 130 to 131 EUR.
- VAT Group: Berenberg goes from hold to buy targeting 475 CHF.
- WPP: Oddo BHF goes from outperformance to neutral by targeting 1240 GBp.
Important (and less important) announcements
- Stellantis reassembles a night team in Mulhouse, 800 temporary workers recruited.
- The shareholders’ funds of Electricité de France are asking France to clarify its plans.
- Orpea is considering legal action and contesting the accusations of a book that has caused its share price to sink and, to a lesser extent, that of competition Korian.
- Icade and Covivio are developing their partnership on the Quai 8.2 operation in Bordeaux.
- Nexity is delivering the “Le Dauphiné” office building in the ZAC Urban’East in Saint-Priest.
- Enertime estimates that it can reach operational breakeven in 2023 and will raise funds.
- The combined general meeting of shareholders approved the transfer of the listing of Capelli shares to Euronext Growth Paris.
- NamR selected by Microsoft to integrate the Environmental Start-up Accelerator.
- BigBen, Interparfums, Omer-Decugis, Airwell Group, Eurobio, Lumibird and Nacon have published their accounts.
In the world
Important announcements (and others)
- International Business Machines stock with no post-session reaction after solid quarterly results.
- Credit Suisse takes another 500 MCHF of provisions for disputes in Q4.
- Sales of Ericsson’s Q4 are above expectations.
- The Swatch Group publishes higher than expected annual operating profit.
- Logitech raises its forecast for the 2021/2022 fiscal year despite a 2% drop in quarterly revenue.
- Hyundai posts quarterly earnings below expectations.
- TechnipFMC signs a contract with Petrobras.
- Unilever plans to lay off thousands of regional and divisional executives in a bid to accelerate innovation after its bid to buy out the consumer healthcare arm of GlaxoSmithKline failed, according to Bloomberg.
- Eni will float its Norwegian subsidiary Vår Energi on the stock market.
- Bob Dylan sold his recording rights to Sony for over $200 million.
- Main results publications : Microsoft, Johnson & Johnson, Verizon, Texas Instruments, Nextera, Raytheon, American Express, General Electric, 3M Company, Atlas Copco, Ericsson, Coloplast, Tryg, Logitech, Rémy Cointreau, SEB… Find the full agenda of the day here.