The Paris Stock Exchange is marking time, with Walmart’s new profit warning emerging as the latest sign of the impact of inflation on consumer habits. The ramping up of the second quarter results season is also not likely to encourage risk taking.
Mid-session, the Bedroom 40 down 0.19% to 6,225.79 points in a business volume of 630 million euros. The contracts future on American indices yield between 0.3% and 0.4%.
The world’s largest retailer lowered its full-year profit forecast for the second time in three months, arguing that customers are cutting non-food and non-energy spending as inflation eats into household budgets. The action walmart fell by almost 9% in the forecourt in New York, leading to Amazon, reported down 3.3%. At European level, the Stoxx 600 for distribution fell by 2.5%, thus posting the worst sector performance. In Paris, Casino drops 4.3%, falling at the same time to its all-time low. Carrefour, for its part, sells 1.1%.
The warning comes as the US Federal Reserve kicks off a two-day meeting of its monetary policy committee on Tuesday. The market is generally pricing in another 75 basis point hike in the Fed funds rate tomorrow, without totally ruling out a more aggressive move. The probability of a rise of 100 basis points is estimated at around 10% by the market. Bank of America strategists believe the Fed may have already embarked on a more “dovish” turn after inflation spiked in June. According to them, the American central bank should now take note “ a slowdown in economic activity “.
Beware of the dollar effect for Gafam
As for corporate results, about 34% of European companies that released their second quarter accounts missed the consensus by at least 5%, according to Goldman Sachs. This is the highest spread since the financial crisis in 2010.
In this week also marked by the results of Gafam, observers fear that the rise of the dollar against other currencies over the past three months “ does not give rise to unwelcome surprises in terms of performance, and lead to downward revisions to forecasts, warns Michael Hewson, chief market analyst at CMC Markets. Alphabet and Microsoft will release their quarterly results after the close of Wall Street. Apple, Meta Platforms (Facebook) and Amazon will follow in the coming days.
On the Old Continent, gas supply is a major challenge, especially since Gazprom has announced that it plans to reduce flows to Germany via the Nord Stream 1 gas pipeline to 20% of capacity from July 27 . Traders expect the cuts to encourage Europeans to turn to oil to meet their energy targets. The barrel of Brent from the North Sea rose 1.7% to 106.67 dollars. TotalEnergies gains 1.1% and Vallourec 2.2%.
Soitec sanctioned, Veolia exposed
Soitec loose 5.7%. The semiconductor manufacturer confirmed its objectives for its 2022-2023 financial year but experienced a marked slowdown in growth in the first quarter ended at the end of June. Revenue reached 203 million euros, up just 12% as reported and 6% at constant scope and exchange rates. Credit Suisse analysts point out that annual revenue growth has “ significantly slowed down to come out 14% below the consensus.
Edenred gains 3.4%. The payment voucher specialist has indicated that it is aiming for a record gross operating surplus (Ebitda) for 2022, of between 770 and 820 million euros, after having seen its half-year results increase sharply.
Veolia Environment down 3.6%. JPMorgan, which has taken over the cover of the title to be “underweight”, says it is pessimistic about the impact that the European energy crisis will have on the group.
Among other analyst notes, Exane BNP Paribas downgraded the cement company Vicat (-3.7%) from “outperformance” to “neutral”.