After an initial decline of 0.4%, the Paris Stock Exchange is trying to rebound under the impetus of the luxury sector driven by the good quarterly performance of the Swiss Richemont and the forecasts of the British Burberry. The underlying trend nevertheless remains weakened by the more aggressive orientation of the US Federal Reserve in the face of inflationary pressures. A turning point that pushes bond yields to new highs.
At 10:30 a.m., the Bedroom 40 takes 0.26% to 7,154.27 points in a relatively substantial business volume of 780 million euros.
Hermes, Kering and LVMH gained between 2.8% and 3.3%, supported by 32% growth in Richemont’s sales over the last three months of 2021, boosted by strong demand for its watches and jewelry in Europe and the United States. Burberry, for its part, expects a 35% increase in profits this year. In Zurich, Richemont advances by 7.3%, while Burberry wins 5% in London. Associated with the luxury sector, EssilorLuxottica rises 1.1%.
Conversely, M6 gives up 7.3% while an investment company of the Frère family sold its entire stake in the television group at a unit price of 16.80 euros, i.e. a discount of 9.7% compared to the Tuesday’s closing price.
Note also the 2.2% increase in Saffron, supported by a rating from Morgan Stanley changed from “underweight” to “line weight” on the title of the engine manufacturer. Conversely, JPMorgan downgraded EDF (-2.1%) by two notches to “underweight”, and reduced its price target from 14 to 7.60 euros, while RBC went from “outperformance” to “in line performance” on Schneider-Electric, which loses 2%.
The German Bund returns to positive territory
On Wall Street, the S&P 500 closed down 1.8% on Tuesday and the Nasdaq Composite 2.6%, weakened by tensions in the interest rate markets and disappointing results from Goldman Sachs. The yield on the 10-year US bond crossed the 1.89% mark for the first time in two years, while that of the two-year bond settled above 1%, a up 30 basis points since the start of the year.
The market now seems to have priced in the prospect of four Fed rate hikes this year. Speculation is rife on an initial rise of half a point in March, against a quarter point previously estimated.
Beyond the United States, the risk of an inflation slide, fueled by tensions in supply chains and rising energy prices, is particularly palpable with the increase to 5.4 % over one year of consumer prices in the United Kingdom in December, the highest since March 1992, after 5.1% in November. In Germany, the increase was confirmed at 5.7%. The yield on the 10-year Bund is stretching to 0.080%, marking its first move into positive territory since May 2019.
These price tensions increase the pressure around central banks. ” If inflation were to prove more persistent, have no doubt that we will have the will and the ability to adapt our monetary policy more quickly, to ensure a return to our 2% objective. “, declared François Villeroy de Galhau, governor of the Banque de France and member of the council of the ECB, during a conference organized on Tuesday by Dauphine University.
North Sea Brent oil remains above $88, the highest in seven years, following the interruption of a pipeline between Iraq and Turkey due to an explosion, and tensions in the Middle East.
On the corporate front, banks Morgan Stanley and Bank of America will release their fourth-quarter results before Wall Street opens. Procter & Gamble and UnitedHealth Group, both components of the Dow Jones, will do the same, before Intel, present in the three major indices, after the close.