The Paris Stock Exchange has come to a halt, hampered by Walmart’s new profit warning and the prospect of a drop in gas consumption in Europe. The energy ministers of the European Union have indeed reached an agreement on a 15% reduction in their consumption, on a voluntary basis, between August 2022 and March 2023, due to uncertainties on supplies from Russia. Derogations have, however, been granted to certain countries.
Around 2:30 p.m., the Bedroom 40 lost 0.16% to 6,227.54 points in a business volume of 930 million euros. The contracts future on US indices fell by 0.4%.
Russian gas cut fears
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. These reductions encourage Europeans to turn to oil to meet their energy objectives. Thus, the barrel of Brent from the North Sea rose by 1.9% to 106.86 dollars. TotalEnergies gains 0.7%.
On Wall Street, walmart, which now expects a drop of 11% to 13% in its annual profit, fell by more than 9% in pre-market trading. The world’s leading retailer said its customers are prioritizing spending on food and fuel over clothing and other more profitable discretionary spending as inflation eats away at household budgets. Amazon follows with a decline of 3.5%.
At the European level, the Stoxx 600 retail index shows the largest sectoral decline with a decline of 2.8%. In Paris, Casino drops 5.2%, falling at the same time to its all-time low. Crossroads yields for its part 0.8%.
The Fed and the Gafam in the crosshairs
Investors also have their eyes on Washington, where the US Federal Reserve begins 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.
This week is also marked by the quarterly results of Gafam. Alphabet and Microsoft will release their quarterly accounts after the close of Wall Street. Apple, Meta Platforms (Facebook) and Amazon will follow by the end of the week
Soitec sanctioned, Veolia exposed
Dassault Systems appreciates by 1.5%. The software publisher raised its forecast for diluted net earnings per share for 2022 after a second quarter during which its results generally exceeded the expectations of its leaders and those of analysts.
Saffron rises by 1.8% while Stifel reiterated its buy recommendation on the stock to target 125 euros. Thales takes another 2.2%.
Soitec loose 7.3%. 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 gain 3.2%. 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 3.9%. 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 (-4.8%) from “outperformance” to “neutral”.