After having signed last year its best vintage since 1999, the Paris Bourse begins 2022 with new records in the hope that the surge in contamination at Omicron will not hamper the economic recovery. Growth in manufacturing activity has continued in the euro area, according to the survey carried out by IHS Markit. The index was confirmed at 58 points in final figures for December, after 58.4 in November, but the slight easing of tensions on supplies encouraged a record increase in purchases. Trading volumes, however, remain symbolic with barely 950 million euros traded on Cac 40 stocks due to the closure of several financial centers on Monday, including the London Stock Exchange.
Futures contracts on the big three US indices point to a roughly 0.5% rise on Wall Street at the opening after the S&P 500 jumped nearly 27% last year. The index most closely watched by managers hit 70 records in 2021. The S&P 500 has recorded an average increase of 1.6% in the first calendar week in 11 of the last 13 years, according to data compiled by Bank of America. You’re here advance of more than 7% on the pre-market after reporting 308,600 deliveries in the fourth quarter. An unprecedented performance for the manufacturer of electric cars and which should have increased its sales to around 87% last year.
Around 2:30 p.m., the Cac 40 rose 1.17% to 7,236.80 points after a new record during the session at 7,245.66. In Frankfurt on Dax appreciates 1.07% and the index Stoxx Europe 600 takes 0.70% after a new historic peak at 491.43 points.
Reasonably optimistic markets
In Asia, Tokyo, Sydney and Chinese places were closed on Monday. In Hong Kong, the Hang Seng index fell 0.53% this morning after losing 14.1% last year, one of the worst performances among the major world markets. Evergrande shares were suspended from listing. The real estate developer, who did not honor the payment of coupons linked to a bond for an amount of 255 million dollars due last Thursday, remains in a delicate situation. However, he has a grace period of 30 days to honor this payment.
Investors want to be reasonably optimistic that while the Omicron variant is significantly more contagious than previous strains, it is also known to be less dangerous, according to hospitalization data. The risks to the economy linked to the pandemic are expected to decrease, especially as China is on the way to easing its monetary policy.
Generally, ” our economists anticipate less disruption to economic activity and aim for above-trend global growth in the first quarter, particularly in Asia. Regarding the Fed’s monetary tightening, the peak of disruption for the markets is also close “, Summarize the strategists of JPMorgan based in Hong Kong in a note quoted by Bloomberg.
Oil, luxury and automotive in sight
Investors will keep an eye on the development of inflation and the response of central banks. Many strategists, including those at Citi, predict increased volatility in the face of these unknowns. The week which begins will be marked in particular by the first estimate of December inflation in the euro zone, as well as by the employment report for the same month in the United States. The Fed will also publish on Wednesday evening the “minutes” of the meeting of its monetary policy committee on December 14 and 15.
TotalEnergies earns 2%. Libya has reduced production due to ongoing repairs to facilities damaged by attacks on several fields in the country. Opec + is due to meet on Tuesday to discuss an increase in production in February. The market estimates that the expanded cartel should stick to an increase of 400,000 barrels per day next month.
Saffron adds up to 1.8%. Its managing director, Olivier Andriès, estimates in an interview with Figaro that the worst is over for the aeronautics sector and says he is “very confident”. Airbus advance for its part of 2.3%.
Air France-KLM 5% advance and ADP 3.8% while Citi raised its recommendation on the two securities to “sell” to “neutral”.
Michelin (+ 2.8%) signs a new record while Oddo BHF raised his price target from 160 to 175 euros while maintaining his opinion of “outperformance”. Great (+ 1.5%), Schneider Electric (+ 2.2%), Pernod Ricard (-0.2%) and Teleperformance (+ 2%) also reached new highs.
Main supporter of the Cac 40 last year, the luxury sector remains surrounded. L’Oreal thus increases by 2.6% and LVMH by 1.2%.
Finally, Renault and Stellantis garnered around 3% in the wake of the Stoxx 600 in the automotive industry, the largest sector increase in Europe with a gain of 2.2% after a 25% jump last year, the most marked since 2013.