The mood darkened over the weekend on the stock market, as fears about inflation and expectations of a Fed rate hike have eroded, but not stifled, hopes of an economic recovery. The relapse of 1.9% in retail sales and the surprise contraction of 0.1% in industrial production in the United States last month cast a chill. The fourth quarter results season has also just started in the United States with contrasting copies from the big banks, to say the least.
Shortly after 4 p.m., the Bedroom 40 lost 0.44% to 7,168.18 points in a business volume of 2.25 billion euros. In New York, the Dow Jones yields 0.41% and the S&P500 0.09%, while the Nasdaq Composite regains 0.21%.
JPMorgan disappoints, Wells Fargo surprises
JPMorgan fell 5.2% in New York after reporting a 28% jump in investment banking revenue, but trading revenue fell 13%, weighing on results. Citigroup lost 1.9% as strong growth in its investment banking division was offset by increased spending. Conversely, Wells Fargo gained 2.8% driven by earnings per share above expectations of $ 1.25, against 1.13 estimated by Refinitiv, thanks to disposals.
The banking sector signed the best performance of the S&P 500 last year and the movement should continue this year, indicated Ipek Ozkardeskaya, senior analyst at Swissquote, this morning. ” So if the big banks’ results turn out to be anything but extraordinary, the tide could quickly turn. The risk is therefore that, even if the results are brilliant, they do not lead to a fall in prices. “, he warned.
Appointment is made for the month of March
Current Federal Reserve Governor Lael Brainard is the latest official to call for a rate hike as early as March. During her confirmation hearing for the position of vice-president of the central bank, she recalled that the Fed plans “ several rate hikes this year. We will be in a position to do so…once the asset purchases are complete “. This program is due to end in March, paving the way for a rate hike at the March 15-16 FOMC meeting.
Patrick Arker, Charles Evans and Mary Daly, the presidents of the Chicago, Philadelphia and San Francisco Feds, joined several of their colleagues in calling for a tightening of monetary policy. Fed Governor Christopher Waller said he favors a quick series of four or five rate hikes if inflation does not come down.
” Everyone is very nervous right now because everyone [les types d’actifs] will potentially come under pressure from an aggressive Fed policyd,” said Kyle Rodda, a market analyst at IG in Melbourne, quoted by Reuters. There is hope that the transition to monetary policy normalization will be slow and painless., he adds, but this is not necessarily assured as the Fed takes inflation very seriously “.
EDF falls heavily
EDF picks up 15%. The measures announced by the French government to limit the rise in electricity prices could reduce the gross operating surplus by 7.7 to 8.4 billion euros this year, the group estimated based on the current market prices. The energy company has, at the same time, reduced its production forecast, in particular because of the difficulties encountered by its Penly power plant, in Seine-Maritime. The group will have to buy this production deficit at a high price on the market, which will further deteriorate the 2022 accounts. For JPMorgan, a recapitalization will be necessary.
Kering loses 2.7%, L’Oreal 1.9%, LVMH 1.4% and Hermes 2%. Associated with the sector, EssilorLuxottica plaice by 1.3%. The same goes for technology. STMicroelectronics down 2.2% and Soitec 4.8%.
Elior loose 6.2%. Moody’s lowered the catering group’s credit rating to B1 from Ba3. The agency justifies its decision by the anticipation of a slower recovery due to the wave of infections with the Omicron variant. However, the outlook for the rating has been raised from negative to stable.