The Paris Stock Exchange is moving forward on Monday thanks to stronger than expected growth in the world’s second largest economy. Chinese GDP grew 8.1% in 2021 and 4% year on year in the fourth quarter, against 8% and 3.6% respectively expected. The market is also counting on new support measures from the country’s central bank, which would thus take the opposite view from the Fed.
The activity is however limited with 1.5 billion euros traded on the values of the Cac 40 due to the closure of Wall Street for Martin Luther King Day. Investors are positioning themselves for the fourth quarter earnings season, which should provide indications of the health of companies in the face of the prospect of interest rate hikes in the United States and inflation at its highest since 1982. A New York, technology stocks have suffered particularly from this environment, the Nasdaq Composite now showing a loss of 4.8% since the start of the year, while the S&P 500 has lost 2.2% over the period.
At 3:45 p.m., the Bedroom 40 gained 0.73% to 7,195.24 points. Elsewhere in Europe, the Dax of the Frankfurt Stock Exchange takes 0.41% and the Footsie Londoner 0.69%.
JPMorgan still “bullish” on stocks
JPMorgan strategists say the consensus for U.S. corporate earnings per share growth of 19% year on year in the fourth quarter and 12% in the eurozone, from around 40% in the third, is too conservative. ” We remain very positive on the earnings outlook for 2022 and anticipate another year of significant outperformance relative to expectations, which should support our still bullish stance on equities. “, they write. The earnings season is starting slowly in France with Alstom’s third quarter accounts on Thursday. In the United States, Morgan Stanley, Goldman Sachs, Bank of America, Procter & Gamble and Netflix must return their copy for the fourth quarter in the coming days. JPMorgan Chase shares fell 6% on Friday despite record earnings. The bank has indeed warned that rising costs will weigh on its profits this year.
The markets are anticipating further monetary easing from the People’s Bank of China to revive an economy which remains weakened by the problems of the real estate sector and the zero-Covid policy which is weighing on consumption and increasing tensions on the supply chains. supply. This pressure is increasing as contaminations with the Omicron variant have been reported in Beijing, Shanghai and in the province of Guandong, where the Shenzhen technology hub is located. A development that worries all the more three weeks before the opening of the Winter Olympics. The Chinese central bank has also announced a surprise reduction in its interest rates on two medium-term loans, a first since April 2020.
The best for Renault in the most profitable models
China’s monetary policy stance contrasts with that of the US Federal Reserve, which is expected to make three or even four interest rate hikes this year before embarking on a reduction in the size of its balance sheet to from the second semester. Several Fed officials have recently spoken in favor of an initial monetary tightening as early as March, but the market will now have to do without their comments as members of the Federal Reserve enter a period of “blackout” at the approaching the meeting of the monetary policy committee on January 25 and 26.
Renault takes 0.6%. While the group’s worldwide car and van sales fell by 4.5% last year, those of its sales to individuals and those of electric vehicles, the most profitable and central lever of its recovery strategy, recorded a strong progress in Europe.
The luxury sector is picking up after the Chinese growth figures, the main market for players in the sector. Kering gains 2.2%, Hermes 2.9% and LVMH 0.9%.
Sanofi appreciated by 1.6% in the wake of Britain’s GlaxoSmithKline, up 3.5% in London. The group has rejected Unilever’s £50 billion bid for its consumer healthcare arm, saying it falls short as GSK’s offer undervalues the fundamentals of its division which it was considering splitting off the year last. The consumer goods giant has held talks with banks to raise its offer, sources cited by Bloomberg report. Unilever fell by almost 7%.
Thales rises 1.8%. Citi, buying on the value, raised its price target from 104 to 108 euros. The broker, which describes the value as a “defensive refuge”, expects a solid cash flow in 2021 and 2022.
Vallourec advance of 6.5%. The seamless tube maker is discussing with Brazilian authorities the reopening of its Pau Branco iron ore mine, which was suspended following heavy rains, reports Value Economico.
Conversely, EDF loses another 4.6%. BofA Global Research downgraded the stock from “buy” to “underperform”. For its part, HSBF reduced its recommendation from “buy” to “hold”. The electrician is struggling with government measures to reduce the price of electricity. The group has also revised its nuclear production forecast downwards, as some of its power plants have corrosion problems.