I use the image of the roller coaster evoked on Tuesday to describe the situation this week on the financial markets. The easing phase observed yesterday in the Ukrainian standoff allowed the indices to rebound, led by stocks which had been chopped up in recent days, particularly in the cyclical and technological pockets. We are therefore back in an ascending phase of the small stock market wagon. The question that everyone is asking is whether the wagon is going to come down sharply thanks to renewed tension between Moscow and the West, or if the carousel ride is over because the protagonists find a land of lasting agreement.
Result of the races, the CAC40 and the DAX, which become inseparable, took over 2%. In the United States, the Nasdaq rebounded 2.47%, twice as much as the Dow Jones. Asia is taking the opportunity to offer itself a nice recovery, which reaches 2% in Tokyo for example. All sectors progressed, with the exception of energy, which suffered from Tuesday’s easing in oil prices, which remained in the USD 90 to 100 zone for the two benchmark barrels, Brent and WTI. To put the current turmoil on the equity markets into perspective, note that the CAC40 is less than 6% from the all-category record signed on January 5th.
The Ukrainian crisis therefore experienced a new upheaval yesterday, with the departure of part of the Russian troops massed on the border between the two countries and the comments deemed constructive by Vladimir Putin. Well, at the same time, Ukraine was the victim of a vast cyberattack that we imagine poorly orchestrated from the Larzac plateau. You have to get used to it, the master of the Kremlin is also the master of the game for the Western stock markets: it is his declarations, and not those of his antagonists, which give the markets heartache and cold sweats for diplomats. However, the East-West conflict is not a Melian dialogue, in the sense that there is no camp capable of imposing its will on the other without discussion. A negotiated outcome remains possible.
As I rarely resist the pleasure of explaining an ancient expression, I will briefly tell you where this curious expression of “Melian dialogue” or “Melian order” comes from, which is fundamental in relations between nations. The purists will forgive me, I hope, for this very simplified version. During the war between Athens and Sparta, the Athenians were confronted with the inhabitants of the small island of Melos. Conscious of their inferiority, the islanders asked their powerful rivals to respect their neutrality. But Athens replied that justice only applies between equal powers and that in this case the weak should submit to the strong. For good measure, all Melians of fighting age were put to the sword and their families enslaved. We find of course a similar morality in the fable of La Fontaine The Wolf and the Lamb (“The reason of the strongest is always the best…”), borrowed from Aesop.
The stock market session of the day will be dominated by a battery of indicators in the United States in various fields. Yesterday’s US producer price data for January showed that economic overheating is still in play and that the US central bank will dip its toes in getting inflation back under control. Moreover, the yield on 10-year US government bonds rose sharply above 2% in response. There will also be a full wheelbarrow of corporate results, particularly in the area of semiconductors across the Atlantic and consumption in Europe. Among the darlings of the markets, we find Air Liquide for good fathers, Nvidia for budding investors or Carrefour for the slightly faded flavor of speculation.
Leading indicators point to a higher stock market opening in Europe this morning. The VIX index, which has been accompanying us again for a few days in this column, fell yesterday, while remaining in a zone of discomfort which shows that volatility is still present. Both because of the damage caused by inflation everywhere and because of the uncertainty surrounding the crisis in Ukraine. The CAC40 gains 0.3% to 7,000 points at the opening.
Economic highlights of the day
Big program in the United States with retail sales (2:30 p.m.), industrial production (3:15 p.m.), the NAHB real estate index (4:00 p.m.), business stocks (4:00 p.m.), oil stocks (4:30 p.m.) and minutes from the last Fed meeting (8:00 p.m.). China announced this morning an inflation of 0.9% in January, for a consensus positioned at 1%. Producer prices show an annual growth of 9.1%, against 9.5% expected.
The euro/dollar pair is stable at 1.1348 USD. The ounce of gold is losing altitude at 1852 USD, oil also with Brent at 93.12 USD and WTI at 92.02 USD. The yield of the T-Bond goes back to 2.03% over 10 years. Bitcoin consolidates its rebound from the previous day at $44,128.
The main changes in recommendations
- Adyen: Deutsche Bank goes from holding to buying.
- AstraZeneca: Jefferies remains to be held with a price target reduced from 9100 to 8800 GBp.
- BAE Systems: Morgan Stanley moves from overweight to weighted online by targeting 642 GBp.
- Basic-Fit: Jefferies starts tracking long, aiming for EUR 56.
- Basilea: Kepler Cheuvreux remains long with a target reduced from 67 to 64 CHF.
- British American Tobacco: Cowen remains the market performance with a price target raised to 2,000,853,500 GBp.
- Clariant: CFRA goes from buying to holding, aiming for 17 CHF.
- Coface: Oddo BHF goes from neutral to outperformance by targeting EUR 13.30.
- Delivery Hero: Deutsche Bank goes from buy to hold targeting EUR 80.
- Evraz: Citigroup resumes monitoring the purchase by targeting 490 GBp.
- Exel Composites: Inderes goes from accumulating to reducing, targeting EUR 7.50.
- Fraport: Bank of America goes from neutral to long, targeting EUR 75.
- Home24: Berenberg remains long with a target reduced from 17.30 to 15.90 EUR.
- Idorsia: Citigroup remains on the buy side with a target raised from 224 to 25 CHF.
- Ipsen: Berenberg remains to be kept with a target raised from 92 to 95 EUR.
- Michelin: AlphaValue remains to be accumulated with a target price raised from 156 to 158 EUR.
- Rovio: Berenberg remains long with a target raised from 8.80 to 9 EUR.
- Segro: Goodbody goes from hold to buy targeting 1400 GBp.
- Straumann: Credit Suisse reduces its target price from 2235 to 1870 CHF.
- Telenet: Citigroup goes from neutral to buy, targeting EUR 37.
- Thales: Morgan Stanley goes from online weighting to overweighting by targeting EUR 98.
- The Gym Group: Jefferies starts follow-up on purchase by targeting 340 GBp.
- Tod’s: Intesa goes from holding to accumulating, targeting EUR 53.30.
- Zeal: Jefferies starts long tracking targeting EUR 47.
- Zurich Airport: Bank of America goes from neutral to underperforming by targeting CHF 173.
In France
Results of major companies
- Air Liquide: the group is aiming for an increase in its results this year, after having earned €2.57 billion in net profit in 2021. The dividend has been raised to €2.90. An investor day is organized on March 22 for medium-term objectives.
- La Française des Jeux: the group is raising its targets for 2025 after a 2021 financial year that exceeded expectations.
- Neoen: the group has confirmed its 2025 EBITDA target after the publication of its annual results.
- Nexans: 2021 results exceed expectations. The group is aiming for an EBITDA increase of between €500 and €540 million this year (consensus €527 million).
Important (and less important) announcements
- Airbus is finalizing a contract to sell 7 A350s in freighter version to Singapore Airlines.
- Solvay and Veolia launch the “Dombasle Énergie” energy transition project.
- Sodexo and Microsoft continue their collaboration.
- Gecina pre-markets 80% of the “Boétie” program in Paris 8th.
- Eiffage sells five of its public-private partnerships to Quaero Capital.
- Elis acquires Textilservice Jöckel in Germany.
- Quadient launches its Beanworks accounts payable automation solution in France and the UK.
- Exel Industries finalizes the acquisition of the Italian company GF Garden.
- Latecoere and Airbus collaborate on three space projects in Europe
- The €4 takeover bid for Itesoft postponed to facilitate the work of the independent expert.
- Hydrogène de France reaches an important milestone for its Barbados project.
- Kerlink and Clickie deploy smart store systems for Latin America’s largest convenience store chain.
- Boostheat signs a one-year renewable collaboration contract with CETIAT with the aim of supporting the development of the BOOSTHEAT Thermal Heat Pump (PAC) in various applications.
- Biosynex holds 3% of Novacyt.
- Bic, Coface, Haulotte, M6 Métropole Télévision, Musée Grévin, Olympique Lyonnais, Poujoulat, Madvertise, Ashler, have published results and/or forecasts.
In the world
Results of major companies
- Ahold Delhaize: Q4 results are above market expectations.
- Airbnb: the title gains 3.6% post-session after the publication of convincing results.
- Heineken: the volumes sold in 2021 are slightly above expectations. But the company warns that inflation will affect its bottom line.
- Schindler: Q4 results are down but above market expectations.
Important announcements (and others)
- SeaWorld throws in the towel after the rejection of its takeover bid for Cedar Fair, which also rejected Six Flags.
- Kirin will sell its beverage joint venture in China for JPY115 billion.
- The SEC examines the relationship between the American branch of Binance and two trading companies linked to its founder.
- Stadler obtains an order in Germany for 20 Flirt trainsets.
- Dufry renews its concession at Helsinki airport for five years.
- The main publications of the day : Nvidia, Cisco, Applied Materials, Shopify, CSL, Analog Devices, Air Liquide, Heineken, Ahold Delhaize, Schindler, Genmab, Kerry, Tenaris, Carrefour… The whole agenda here.
Readings