Volatility fell (slightly) yesterday on the financial markets, which ended on moderate declines yesterday, despite the announcement by the United States of an embargo on the import of Russian oil. Well, the fact is that the indices have continued to slide anyway, with a curious sector mishmash which shows that investors are not all in agreement on what to do. There are the cautious, who continue to cement their defensive positions. Opportunists, who overexpose themselves to energy. Or the inveterate optimists who see it as a good opportunity to buy cheaply. This confusion has allowed sectors that have not been very compatible lately to find themselves in the same direction, for example the automobile and energy in the United States.
Energy precisely, at the heart of the paradox: the EU has multiplied the sanctions vis-à-vis Russia, but it cannot, in the current state of things, do without gas from the East . The United States does not have this problem: Joe Biden announced yesterday an embargo on the import of Russian fossil fuels. For a few days, it had become almost obvious that the White House was going to draw this new weapon of pressure, with or without the Europeans. This explains the moderate reaction of the financial markets, which had had time to integrate this scenario. This did not prevent oil, and it is logical, to rise again to 130 USD per barrel of Brent.
Critics of this European Union that is too quick to sacrifice its energy independence to the Russian cornucopia drink whey. One more example of the subjection of the old continent to the rest of the planet. If the past three years have proven anything, it’s the vulnerability of a region that has relied too long on the memory of its world domination. Health, industry, electronics, digital… Europe is overwhelmed in many areas. And while we can welcome the initiatives launched in the wake of the pandemic, they still need to materialize.
But enough flagellation, the lines may also move in the sovereign domain. Now that energy is the elephant in the room, we have to react. This is perhaps what the European authorities are going to propose, which would prepare a vast financing plan in energy and defense for the Member States, via bonds. So maybe I wrote some nonsense yesterday: the European Central Bank might finally have something to talk about tomorrow, as EU leaders meet in Versailles to try to structure themselves against the Russian threat. It will of course be necessary to brave the usual dissensions between countries, but it is clear that some of the dikes which isolated the points of view have fallen in recent days. The Germans are no longer braced on their orthodox positions, the Poles and the Hungarians are too close to the front line to be comfortable and the French will be able to play the leaders with a certain legitimacy since they preside over the EU for six months. We’ll see what comes of it, but the time for innocence seems to be coming to an end.
Honestly, it’s hard to find short-term economic positives. The tidal wave of price increases does not bode well and the latest companies that publish their results tend to announce targets covered with conditionals or not to give any at all. The mood has changed a lot from the companies that communicated before the Russian invasion of Ukraine. Apart from the evolution of the situation in the theater of war, it is therefore the political and economic events that risk dictating the direction of the wind for the financial markets. ECB meeting scheduled for tomorrow, EU summit in Versailles on Thursday and Friday, pending Fed monetary policy announcements on March 16. Until then, a lot can happen.
In Asia this morning, attempts to rebound have been more or less wiped out, except in Sydney where the ASX gained 1% at the end of the course. The Nikkei is down slightly, while the Chinese indices are in a much more pronounced contraction, around 1.7% for the Hang Seng and the CSI 300. As for the leading European indicators, they are bullish for the moment, which could allow them to erase their contraction from the day before.
Economic highlights of the day
The JOLTS survey of job openings in the United States in January (2:30 p.m.) and the weekly oil inventories of the DOE (4:30 p.m.) are scheduled. This morning, Japan announced annualized growth of 4.6% in Q4 2021, while the market was hoping for 5.6%. Chinese inflation reached 0.9% in February, in line with expectations.
The euro rises to 1.09188 USD. The ounce of gold beats its recent peaks at 2050 USD. Oil is acknowledging the US embargo on Russian imports, with North Sea Brent at 130.58 USD and US light crude WTI at 125.71 USD. The yield on US debt is stable at 1.78% over 10 years, but the Bund is back in positive territory at 0.11% (vs. -0.02% the day before). Bitcoin rebounded to $41,514 after a true-false statement from the US Treasury on cryptocurrencies. Also note that the LME will not resume nickel trading until March 11.
The main changes in recommendations
- Accor: Berenberg goes from holding to buying, aiming for EUR 32.
- Air France-KLM: AlphaValue goes from accumulating to reducing, targeting EUR 3.34.
- Carlsberg: Morgan Stanley moves from overweight to weighted online by targeting 900 DKK.
- Carrefour: AlphaValue remains on the buy side with a target raised from 23 to 24.30 EUR.
- Getinge: Jefferies resumes the follow-up to keep aiming for 360 SEK.
- HelloFresh: Berenberg remains long with a price target reduced from 106 to 75 EUR.
- Inventiva: Jefferies remains long with a target price reduced from 23 to 19.50 EUR.
- Nemetschek: Exane BNP Paribas starts tracking at neutral, targeting EUR 80.
- Neste Oyj: Berenberg goes from holding to buying, targeting EUR 46.
- OC Oerlikon: RVC goes from sector performance to outperformance by targeting 9 CHF.
- Rio Tinto: Citigroup goes from buying to neutral.
- Rotork: RBC goes from underperformance to outperformance by targeting 345 GBp.
- Shop Apotheke: Berenberg remains long with a target price reduced from 175 to 125 EUR.
- Sika: BofA goes from buy to neutral, aiming for 300 CHF.
- Umicore: JP Morgan goes from underweight to neutral, targeting EUR 27.50.
- Universal Music Group: Oddo BHF goes from neutral to outperforming, targeting EUR 25.50.
- Vesuvius: RBC goes from sector performance to outperformance by targeting 475 GBp.
- Wacker Chemie: HSBC goes buy to keep, targeting EUR 140.
In France
Important (and less important) announcements
- TotalEnergies discussed an increase in production at Waha with the Libyan group NOC. Or
- L’Oréal closes its stores and suspends its advertising investments in Russia.
- Sanofi and Swedish Orphan Biovitrum report positive first results for the pivotal phase III XTEND-1 study with efanesoctocog alpha (BIVV001) in hemophilia A.
- Dassault Systèmes suspends its new activities in Russia and Belarus.
- Elis warns that its Ebitda margin will be penalized by energy prices in 2022.
- Elogen (Gaztransport & Technigaz) will build its future “gigafactory” in Vendôme, in the Centre-Val de Loire region.
- Antin Infrastructure Partners has completed a strategic investment in Lake State Railway Company.
- Damartex acquires JP Consult.
- Onxeo publishes preclinical studies confirming the relevance of the combination of AsiDNA with PARP inhibitors in the treatment of tumors.
- Agripower is launching a co-operating offer for individual methanisation.
- McPhy, Groupe Partouche, Makheia and Ekinops have published their accounts.
In the world
Important announcements (and others)
- Adidas thinks it can generate 11 to 13% growth this year, a little more than expected.
- McDonald’s is temporarily closing its 850 Russian locations. PepsiCo, Coca-Cola, PayPal and Starbucks also freeze their activity.
- The SEC will investigate the options market in connection with Microsoft’s takeover of Activision.
- Apple introduces a 5G iPhone SE with an A15 processor, with prices rising.
- Geberit published an Ebitda in line with expectations and a slightly lower net profit. The company waives providing forecasts with regard to the context.
- Leonardo pauses the sale of its OTO Melara and Wass divisions.
- Salvatore Ferragamo estimates sales exposure to Russia to be less than 1%.
- The main publications of the day: Deutsche Post, Crowdstrike, Prudential, Adidas, Geberit, Vivendi, Brenntag, Somfy, Elis, Tikehau… The whole agenda here.
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