The US markets managed yesterday, failing to rebound, to reduce their losses at the end of the course, to close on anecdotal contractions. This is the first time in seven sessions that the Nasdaq has posted a variation of less than 1%. A stabilization obtained even though the boss of the Fed, Jerome Powell, recited his new mantra in the afternoon: we will have to hurt ourselves a little before things get better, to avoid it being even worse afterwards. In Powellesque language, this means that the Fed is ready to put the financial markets and the economy under increased pressure by raising key rates until it has obtained a sufficiently convincing result on the reduction of inflation. The Fed Chairman introduced the term “pain” into his vocabulary recently. He nevertheless took the opportunity yesterday to suggest that a rate hike of 75 basis points in July, the new scarecrow of the markets, is not on the agenda. Pain yes, but no sadism. We have reached the stage where investors would sell their mother for good news, so this update is not unrelated to the small boost in confidence on Wall Street yesterday at the end of the course.
As for Europe, it still shows a somewhat suspicious resistance. She slips all the same, let’s not exaggerate, but for once her technological inferiority complex is useful to her: there are not many Coinbases or Rokus to burn on this side of the Atlantic. So yesterday on the old continent, the indices lost part of their rebound from the day before, ending however quite far from their lows of the day, which is already not so bad. The opportunity to dive in more detail on two incongruities, the OMX Oslo and the Portuguese PSI20, which have posted gains of 4% and 1.5% respectively since the 1er January, while the broad European STOXX Europe 600 index lost 13%.
This is indeed a good opportunity to address the issue of diversification. You may wonder how, on the same continent, it is possible to end up with such a disparity in performance. In this case, geography does not have a direct impact on the response, which essentially depends on the composition of the indices. Take the OMX Oslo: the Norwegian index includes more than 50% of stocks from the energy sector, including nearly 30% for the local champion, Equinor. In reality, the file should even weigh half of the index, but its weight has been reduced to limit its influence in the fluctuations. No one has been able to save their skin so far in 2022 without being heavily exposed to fossil fuels. I wrote above that geography has no direct impact, but that’s a bit wrong: Equinor has a disproportionate weight on the Norwegian chessboard because the country has oil. In any case, this is what enabled the OMX Oslo to gain 4% this year, while the CAC40 lost 12.5%. I forgot, we should also note the very good performance of the four salmon producers in the index, classified in the category of non-cyclical consumption, therefore players considered to be defensive. Here too, geography joins specialization: it is more complicated to raise salmon in the Gulf of Saint-Tropez. The Norwegian recipe for outperforming? Oil and salmon.
The case of the Portuguese PSI20 is also interesting. The Lisbon index gives pride of place to collective services, since the energy companies EDP and EDP Renovaveis account for a quarter of the total. The other two heavyweights are the food distributor Jeronimo Martins and the oil group Galp. Of these four players, only Galp is up in 2022, but clearly up. The good performance of the index is also explained by the progress of three companies classified in basic materials, Semapa, Altri and The Navigator Company. They are three players in the paper industry, as their name does not really indicate. If we add to this the progress of the telecom group NOS and that of the large local bank, the Banco Comercial Português, we understand why the PSI20, very “old school” in its composition, pulled out of the game at the start of the year. ‘year.
I close this little index parenthesis to return to hot news. Company publications are coming to an end, at least as far as big files are concerned. Commodities are still choppy: Wheat strengthened after US authorities announced that Ukraine’s harvest will be a third lower than last year, while oil remains high despite signs that the European Union will not be able to impose unanimity on the banning of Russian oil. In China, officials have denied a plan for containment by Beijing, and those in Shanghai are hopeful to have avoided the spread of the coronavirus by mid-May. It should also be noted this morning that the dollar continues to push towards parity with the euro and that it is sinking gold, and that a counterattack is underway from cryptocurrencies.
For investors still looking for a low point, the resistance posted yesterday in the United States is a signal of optimism. The Asian indices recovered strongly at the end of the week, with a Nikkei 225 which won 2.55% or a Hang Seng up 2%. European and US leading indicators are pointing up. With a still high level of nervousness, that does not guarantee that the pre-open indications will be in phase with the close tonight. But you’re starting to know the song so I’m not going to dwell on that.
Economic highlights of the day
European industrial production for March will be released at 11:00 a.m. and the US consumer confidence index at 4:00 p.m. All the “macro” agenda here.
The euro took a new hit after having gone the distance in recent days: it fell to 1.0398 USD. Despite the tensions, an ounce of gold does not interest many people and trades at 1826 USD. Oil looks unstoppable, with North Sea Brent at $108.78 a barrel and US WTI light crude at $107.89, with the spread narrowing. The yield on US 10-year debt is stable at 2.89%. Bitcoin rebounds after US indices stabilize at $30,800.
The main changes in recommendations
- ArgenX: Deutsche Bank moves from hold to buy targeting EUR 320.
- Fortum: SEB goes from holding to buying, targeting EUR 19.
- HeidelbergCement: Berenberg remains long with a price target reduced from 72 to 70 EUR.
- Home24: Berenberg remains long with a price target reduced from 9.20 to 6.80 EUR.
- Genmab: Berenberg goes from sell to hold aiming for 2200 DKK.
- KBC: Berenberg remains to be kept with a target price raised from 60 to 62 EUR.
- Logitech: Julius Bär goes from holding to buying, aiming for 75 CHF.
- Roche: Jefferies goes from buy to hold, aiming for 360 CHF.
- SoftwareONE: Research Partners goes from hold to buy aiming for 15 CHF.
- TotalEnergies: Berenberg went from holding to buying, targeting EUR 58.
- Ubisoft: Credit Suisse reduces its target from 55 to 49 EUR.
- Vestas: Berenberg goes from buy to hold aiming for 165 DKK.
In France
Company results
- Eutelsat: confirms its revenue forecasts for the financial year ended June 30 and its other objectives.
- Rothschild: activity is up 7% in Q1. The investment bank is cautiously optimistic about its outlook.
Important (and less important) announcements
- Bouygues has finalized the acquisition contract for Equans from Engie.
- Renault confirms floor on a split of its thermal and electrical activities. Renault would become a 100% electric brand by 2030.
- Electricité de France launches a capital increase reserved for its employees.
- Compagnie Plastic Omnium wants to increase its turnover to more than €15 billion in 2030.
- BioMérieux receives CE marking for automated testing of the Chikungunya virus.
- Réalités placed a green issue with an impact premium of €5 million.
- Toosla signs a first strategic partnership with Stellantis and expands its offer with the Jeep brand.
- Uniti launches a capital increase of €8 million at €2.85 per share.
- Europlasma relaunches Satma Industries.
- Alan Allman Associates is financed with an OCA of €1 million from the specialist in dilutive financing Negma.
- SII, Equasens (formerly Pharmagest), Union Financière de France, Cafom, IT Link, Olympique Lyonnais, Chargeurs, Erytech, Prologue, M2i, Cellectis, Winfarm, Touax have published their accounts.
In the world
Company results
- Deutsche Telekom: the operator is revising its forecasts upwards and the net profit for the first quarter exceeds estimates.
- Softbank: the title gains 10% in Tokyo despite colossal losses.
Important announcements (and others)
Readings