The Paris Stock Exchange erased its rebound the day before, made when Wall Street was closed for Martin Luther King Day. The prospect of a tightening of the Fed’s monetary policy is causing tensions on the interest rate markets, which is weighing on technology stocks in particular.
Goldman Sachs fell nearly 4% in pre-market in New York while the bank published quarterly results below expectations for the fourth quarter of 2021. Earnings per share came to 10.81 dollars, against 12.08 anticipated by analysts, affected in particular by the decline in trading revenues and the increase in salary costs. Conversely, Activision Blizzard jumped nearly 38% as Microsoft will buy the video game publisher for 68.7 billion dollars. In Paris, Ubisoft advances by 8.9%.
At 2:45 p.m., the Bedroom 40 lost 0.85% to 7,140.42 points in a business volume of 1.7 billion euros. The contracts future on American indices are moving between a decline of 0.6% for the Dow Jones and a rebound of 0.6% for the Nasdaq 100. The index of technology and growth stocks is down 4.8% over the year .
US 10-year yield above 1.8%
On the macroeconomic front, manufacturing activity slowed markedly in January in New York State, the Empire Manufacturing index established by the local branch of the Fed having come out at -7 points, against 31.9 expected.
While the market is expecting a first monetary tightening in the United States in March, then three more during 2022, the yield on the 10-year American bond has reached unprecedented levels in more than seven years. It thus touched 1.8566% in Asia this morning, against 1.7841% in New York on Friday evening, before returning to around 1.8180%. The yield on the two-year maturity crossed the 1% mark for the first time since the end of February 2020.
Reflecting inflationary pressures, a barrel of Brent North Sea crude rose 1.3% to $87.64 after hitting 88.13, its highest level since October 2014. Goldman Sachs analysts see barrel prices hit $100 in the third quarter as the market remains tight in terms of supplies. TotalEnergys takes 1.9%.
Morgan Stanley ‘cautiously confident’ in luxury sector
Technology stocks are logically the most affected, the associated European Stoxx 600 index showing the largest sectoral decline (-2%). Dassault Systems thus loses 2.4%, Worldline 3.3%, Teleperformance 2.6%, and STMicroelectronics 1.7%.
The world’s major financial centers are losing ground this year, hampered by the decline of Wall Street. Beyond the change in tone from the US Federal Reserve, investors are wondering if companies will be able to rekindle market sentiment by weathering higher prices and pressures from the expansion of the Omicron variant.
Big winners in recent years on the stock market, luxury stocks are suffering from profit taking. LVMH loses 1.7%, Kering 1.8% and Hermes 1.1%. Morgan Stanley analysts admittedly remain cautiously confident in the industry’s medium-term sales and earnings outlook. But risks remain, in particular that of a weakening of demand in China in the first quarter.
OVHcloud increased by 2.6%. Goldman Sachs raised its price target from 24 to 26.40 euros, while Citi raised its target from 28 to 33.
Sodexo gained 1.4% following reports that Bain Capital is considering a stake in the company’s benefits and rewards business. An operation which could lead to a partial or total exit from this division, valued nearly 3 billion euros by UBS, and which would be a step in the right direction by creating value for shareholders, estimates the broker, at the purchase on Sodexo to aim for 98 euros.