The Paris Stock Exchange has erased its progress in the morning and Wall Street is marking time at the opening. The market remains in the throes of high volatility after having just broken out of the bear market zone, which corresponds to a decline of 20% compared to its peak in January. Investors are trying to anticipate the reaction of central banks to the economic slowdown, hoping for a less aggressive posture, but the geopolitical climate is growing heavy as the G7 prepares to adopt new sanctions against Moscow, including a cap on Russian oil price.
Shortly before 4 p.m., the Bedroom 40 lost 0.53% to 6,041.25 points after a peak at 6,156.60 (+1.37%) in a business volume of 1.22 billion euros. In New York, the Dow Jones plaice of 0.06% and the Nasdaq Composite by 0.47%.
In the United States, durable goods orders rose 0.7% in preliminary data for May, against +0.1% expected and after rising 0.4% in April. According to analysts at Capital Economics, these figures are consistent with a slowdown in the growth of business investment in equipment in the second quarter, rather than a reversal of the trend. Component of the Dow Jones, Nike will publish its quarterly results after the close of Wall Street.
What about earnings forecasts?
According to Morgan Stanley strategists, European stocks have not yet priced in the risk of recession despite low valuation levels. ” Equity markets tend to pull back two to three weeks before earnings forecasts start to be revised downwards, however, the latter have not yet started to slide into negative territory “, they underline. They expect the lowering of earnings guidance to begin in the third quarter.
This last week of the first half should also be driven by portfolio readjustments by major institutional investors, which should support the markets. Marko Kolanovic, chief market strategist at JPMorgan, believes that these readjustments should lead to a significant rise in US equities this week, especially as he considers the market to be oversold.
Ipek Ozkardeskaya, an analyst at Swissquote Bank, is more reserved, arguing that the magnitude of last week’s rebound raises questions insofar as ” a 3%-4% gain in stocks is a sign that market volatility remains high, conditions are chaotic and gains may be short-lived “. For her, ” what we’re seeing right now could be just another dead-end bounce or short-term hedging when in reality investors are positioning themselves for earnings season “.
Inflation back on the menu for the week
Markets remain focused on the economic outlook. Jerome Powell told Congress last week that a soft landing for the U.S. economy is a challenge and that a recession remains a ” possibility “. He also claimed that the Federal Reserve is ” totally determined to fight inflation.
San Francisco Fed President Mary Daly indicated on Friday that she favored a 75 basis point hike in the Fed funds rate in July, while her counterpart at the St. Louis office, James Bullard, considered the fears of recession exaggerated.
Inflation will again be the center of attention this week with US household income and spending statistics on Thursday, including the PCE component of personal consumption expenditure, the Fed’s most closely watched measure of inflation. On the Old Continent, the figures for consumer prices in the euro zone will be released on Friday after those of Germany and Spain on Wednesday, and France on Thursday.
Faurecia leads the SRD, luxury weighs on the trend
The automotive sector is picking up after three weeks of decline in a row. Faurecia rose 3.6% as Jefferies raised its recommendation on the equipment manufacturer from “hold” to “buy”. Valeo follows with a gain of 2.2%, and Renault appreciated by 1.2%. Plastic Omnium grants itself 1.5%. The group has reached an agreement for the acquisition of Actia Power, the division dedicated to the electrification of vehicles of the French group Actia, on the basis of an enterprise value of 52.5 million euros.
Conversely, large caps such as LVMH, Hermes and Kering yield more than 1%,
Valneva takes 0.5%. The pharmaceutical group has indicated that it has received marketing authorization from the European Commission in Europe for its inactivated vaccine against Covid-19. This authorization covers the 27 countries of the EU, as well as Iceland, Lichtenstein and Norway.
EssilorLuxottica loses 1.8%. The group announced the death of its president Leonardo del Vecchio at the age of 87. Mediobanca, of which he was the main individual shareholder, fell by 2.2% in Milan.
Ipsen fell 3.2% after announcing the acquisition of the American biopharmaceutical company Epizyme, specialized in oncology, for an initial amount estimated at 247 million dollars (234 million euros).