We are in 2022 AD. The whole financial planet is sinking… All of it? Nope ! A place populated by indomitable Gauls still and always resists the invader. This place is the Paris Stock Exchange, which ended with a gain of 0.12% yesterday while the others turned red. Not all of them actually, since a very defensive index like the Swiss SMI did a little better by climbing 0.17%, with great support from Roche and Novartis (and financials). After all, Asterix also visited the Helvetians. In Paris, the resistance was organized without the usual stars, it’s rare enough to be underlined. Worse, the LVMH, Hermès, Kering and other Dassault Systèmes found themselves in the bright red. We had to rely on finance, in particular Société Générale and Axa. Rising bond yields and the prospect of rate hikes are benefiting the sector. The red and black bank was given a personal boost with the announcement of the sale of its Russian subsidiary, Rosbank. We also saw Total and Sanofi at the forefront: two of the three largest weightings in the Parisian index up markedly, that helps. The CAC40 was also entitled to its little personal boost: the results of the first round of the French presidential election reassured the financiers, who were able to rule out their most nightmarish scenario. To paraphrase a famous quote, investors have their hearts everywhere, but their wallets at Emmanuel Macron. More Jupiter than Toutatis, they say.
But enough joking, the French stock market exception the day before is a bit anecdotal. The rest of the market faltered, particularly in the United States where the Nasdaq lost 2.4%. In five sessions, the technology index lost 7.7% and took with it the S&P500 (-3.7% in 5 sessions). Fears are still focused on the effect of the Fed’s rate hike on economic momentum. What do you mean, I’ve already written it 100 times in six months? The fact is that the context does not change much, especially if I add that the sources of inflation continue to fuel the rise in global prices. It’s a bit like melting snow: all the torrents feed the river, which swells before flowing into the river, which in turn swells. The war in Ukraine has brought its share of additional disorders and the Chinese fight against the coronavirus is calling into question the return to normal supply chains. The economist Christophe Barraud, who regularly befriends us to speak on the Zonebourse channel, insists this morning on the shambles that reigns around Chinese ports, at sea with container ships in (Roman?) galleys at the tail leu-leu and dropper unloading for lack of truckers.
It is in this context that the first publications of the results of the 1er quarter of 2022. It starts this morning in Europe with two first of the class, the Swiss Sika and Givaudan. In the building materials market, Sika achieved a record quarter with sales growth of 22%. The group explained that demand is strong despite the context, and that it has been able to pass price increases “consistent” with the increase in its costs. “consistent” is a synonym for “consequent”, at the moment. For its part, the specialist in aromas and flavors Givaudan also had a good start to the year. The Genevan did not use the word “consistent“but explains that he raised his prices”in collaboration with its customers” in order to “fully compensate for the increase in the cost of raw materials“. These price increases that support growth and margins will be legion (Roman?) during this earnings season. But what really matters is how consumers will succeed in cashing in on them over time. We guess that it will eventually become complicated and that certain expenses will end up being postponed. Which also explains the current difficulties of cyclical consumption compared to basic consumption. Or in a more trivial way, why Carrefour gained 20% in two months when LVMH lost 11%.
LVMH, which will join the (Roman?) arena of publications this evening with its sales of 1er trimester. The opportunity to see if Bernard Arnault’s group has retained its ability to amaze investors. Then tomorrow we will find several American financials, including JPMorgan Chase and BlackRock, which must not have suffered too much from the current environment.
The leading indicators are still bearish this morning on the markets. In Asia, everyone is stepping back. Quite strong in Japan (-1.9% for the Nikkei 225) and a little less in Sydney (-0.59% for the ASX). Investors are waiting for the ZEW index of German financial confidence at 11:00 a.m. but above all for the US inflation figures for March at 2:30 p.m.
Economic highlights of the day
Two important appointments today with the ZEW index of German financial confidence for April at 11:00 a.m. and the US inflation figures for March at 2:30 p.m. The whole macro diary here.
The euro, after an attempted rebound yesterday, fell back below the USD 1.09 mark. The ounce of gold dates back to 1958 USD. Oil remains firm with Brent from the North Sea at 100.25 USD a barrel and US light crude WTI at 96.18 USD. The yield on US 10-year debt rose to 2.81%. Bitcoin fell below the USD 40,000 mark.
The main changes in recommendations
- AstraZeneca: Berenberg remains long with a price target raised from 100 to 120 GBp.
- ASM International: Barclays moves from online weight to overweight by targeting EUR 425.
- Atlantia: Societe Generale goes from buying to keeping, aiming for EUR 22.
- Bossard: Berenberg is still buying with a price target raised from 460 to 466 CHF.
- Deutz: Berenberg remains to be kept with a price target reduced from 6.80 to 5.50 EUR.
- Elior: AlphaValue switches from buying to accumulating, targeting EUR 2.91.
- Eurazeo: Goldman Sachs starts tracking at neutral, targeting EUR 92.
- Ferrari: Exane BNP Paribas goes from neutral to outperformance by targeting EUR 255.
- Imperial Brands: Jefferies remains to be held with a price target raised from 1595 to 1668 GBp.
- Intermediate Capital: Goldman Sachs starts the follow-up on the purchase by targeting 2480 GBp.
- Legrand: Societe Generale goes from holding to buying, aiming for EUR 95.
- Leonardo: Deutsche Bank goes from holding to buying, targeting EUR 12
- Neste: JP Morgan goes from neutral to overweight, targeting EUR 53.
- Novo Nordisk: Morgan Stanley moves from underweight to weighted online by targeting 805 DKK.
- Partners Group: Goldman Sachs is starting to track the purchase by targeting CHF 1,630.
- Rapala: Inderes goes from buying to accumulating aiming for EUR 8.20.
- Rolls-Royce: JP Morgan goes from neutral to underweight by targeting 75 GBp.
- Salmar: DNB goes from buy to hold targeting 743 NOK.
- Sixt: Jefferies remains long with a target price reduced from 195 to 160 EUR.
- STMicroelectronics: Barclays goes from overweight to online weighting by targeting EUR 38.
- Telekom Austria: Jefferies remains long with a price target reduced from 8.82 to 8 EUR.
- Valmet: Morgan Stanley resumes online weighted tracking.
- Zur Rose: Berenberg remains to be held with a price target reduced from 230 to 135 CHF.
In France
Important (and less important) announcements
- ISS opposes Axa’s new CEO compensation package.
- EssilorLuxottica will acquire fedon and enter the packaging and spectacle case industry.
- bioMérieux posted a 4.5% contraction in its activity in Q1 and confirmed its 2022 objectives.
- Mersen is changing its board of directors.
- CGG increases its computing capacity with a new HPC center in the UK.
- Poxel Obtains Accelerated Review for PXL770 in ALD.
- Nacon announce Hell is Us, a major new project from Rogue Factor studio, available in 2023.
- Groupe Partouche creates a subsidiary dedicated to projects in the metaverse.
- Carmat launches a capital increase of €30 million at €10 per share.
- Nanobiotix publishes new data on nbtxr3.
- NFL Biosciences obtains a patent in China.
- NHOA, Lucibel, Bourse Direct, BOA Concept have published their accounts.
In the world
Important announcements (and others)
- The Benetton family allied with Blackstone would be close to a withdrawal offer for Atlantia.
- Sales of Sika jumped 22% to CHF 2.4 billion in Q1, boosted by volumes and price increases.
- Givaudan announces 4.6% revenue growth in Q1,
- Honda will invest $64 billion in R&D over the long term to strengthen its position in electrics.
- Shopify launches a division by ten of the par value of its share.
- Meta Platforms is testing the sale of virtual items in the metaverse.
- Bone Therapeutics signs a dilutive convertible bond agreement with Alpha Blue Ocean.
- BB Biotech completes its share buyback program and takes over a.
- Lalique signs a new licensing agreement to create and market fragrances for Superdry.
- The European Commission has given the green light to the planned acquisition of Britain’s Meggitt by Parker-Hannifin for £6.3 billion.
- Main results publications: LVMH, Sika, Givaudan, Albertsons, JD Sports, Evotec, Pennon, Asos… Full agenda here.
Readings