In search of direction, Bedroom 40 ended down 0.45%, at 5,840.55 points, after a hesitant Monday session, marked by a limited trading volume of 2.58 billion euros. More than the closing of the American bond markets for Columbus Day – the equity market is open – the reason for this caution lies in the bitter cocktail that has poisoned the lives of investors for many months now, mixing war in Ukraine , inflation, fears of recession and a general rise in key rates. From now on, a new element is added to it: the imminence of the season of the results of the third quarter of the companies. The luxury giant, LVMH, will open the ball on Tuesday evening. It will be followed at the end of the week by several major American banks (Citigroup, JP Morgan Chase, Morgan Stanley and Wells Fargo). ” The consensus has revised its projections significantly downwards over the past few weeks and the first publications (20 S&P 500 companies) confirm a negative impact from wage increases, supply chains and the dollar “, underlines the Aurel BGC office in its morning note. On the other hand, the forecasts are not disastrous “, considers the firm, even if the number of companies posting a negative outlook for earnings per share is higher than the average over five years. ” At the sector level, the real estate, industrials and consumer discretionary sectors recorded the best pre-earnings. On the banks’ side, the results will show to what extent the risk of economic deterioration and business defaults weighs on the models and gauge the (positive) impact of the rise in rates on profits.
Date with US inflation on Thursday
The subject of the rise in key rates is on everyone’s mind a few days before the publication of the consumer price index in the United States in September. It will be unveiled on Thursday afternoon. Since June, the inflation rate has moderated, dropping from 9.5% to 8.3% over one year, due to lower prices at the pump. ” Disinflation cannot depend solely on the oil market, especially since the OPEC+ countries have announced a sharp drop in production to preserve their export earningsbelieves Oddo BHF. To convince the Fed that disinflation has begun, other prices would have to moderate as well. Are targeted, in particular, foodstuffs and services, including housing prices. At this stage, the market assesses the probability of a 75-point increase in its key rates at the beginning of November at nearly 82%, according to calculations by CME Group based on the evolution of futures contracts on Fed funds. A rise of this magnitude would be the fourth in a row.
In the euro zone, the Dutch Klaas Knot, governor of the European Central Bank, indicated that the institution will have to carry out at least two increases ” significant in rates, after the 75 basis point rise recorded in September. The process of normalizing interest rates will need to be finalized before starting possible discussions on a quantitative tightening program, he continued.
Renault hailed, Casino heckled
On the values front, Renault had a strong start to the week, gaining as much as 6.74% in session before ending with a gain of 2.41%. While the car manufacturer is to hold its investor day on November 8, the subject of cross-shareholdings within the Renault-Nissan Alliance has come back to the table in force. Renault, which owns 43.4% of Nissan, could “significantly” reduce its presence, which appealed to the market.
Manhandled, Casino dropped 3.10% at the close but up 12.7% in session, which brings to 64.9% its fall since the 1er January. On Saturday, the financial rating agency S&P downgraded the rating assigned to Casino’s debt from “B” to “CCC+”, now considered to be ” really bad quality “. ” S&P points the finger at the company’s lack of financial flexibility to invest in price competitiveness in an environment where the consumer’s priority is more than ever that of low prices, a priority which is naturally that of large distributors in the current inflationary environment. commented Invest Securities.
Finally, technology stocks lost ground, dragged down by their Asian counterparts after Washington announced new restrictions on the sale of semiconductors to Chinese companies, including products made abroad with American equipment. STMicroelectronics ended down 1.99%.