The Paris Stock Exchange ends this Friday session in decline. The Cac 40 lost 0.81% to 7,143 points. Over the week, it lost just over 1%, its first weekly drop in a month. In the United States, the world’s largest economy, the 1.9% relapse in retail sales and the surprise contraction of 0.1% in industrial production last month cast a chill. The fourth quarter results season has also just started in the United States with contrasting copies from the big banks, to say the least.
JPMorgan drops 5% on Wall Street
On Wall Street, the bank JPMorgan fell more than 5% after reporting a 28% jump in investment banking revenue, but trading revenue fell 13%, weighing on results. Citigroup down 2%, strong business growth in the investment banking division was offset by increased spending. Conversely, Wells Fargo stands out with a gain of 4%, driven by earnings per share above expectations of $ 1.25, against 1.13 estimated by Refinitiv, thanks to disposals.
The banking sector signed the best performance of the S&P 500 last year, recalls Ipek Ozkardeskaya, analyst at Swissquote. “So if the results of the big banks turn out to be even less than extraordinary, the tide could quickly turn. The risk is therefore that, even if the results are brilliant, they will not lead to a drop in prices”, he warned.
In Paris, BNP Paribas, Agricultural credit and Societe Generale close the session down on the Cac 40, but gain 2 to 3% over the week. Interest rate increases this year in the United States, now expected to be four in number against three at the end of last year, play a supporting role for banks, while the exit from the zero rate policy penalizes stocks of growth, and in particular the shares of “tech” companies. Worldline, Teleperformance and Eurofins Scientific are among the biggest drops in the Cac 40 over the week, along with luxury companies. These, which are paying dearly on the stock market, have also suffered from the latest health developments in China, with the arrival of the Omicron variant at the gates of Beijing. Hermes, Kering, L’Oreal and LVMH lost more than 2% again today.
Historic plunge for EDF
But the most striking information of the day on the stock market was to be sought outside the Cac 40. EDF plunged like never before, going so far as to lose a quarter of their value in the session. The measures announced by the French government to limit the rise in electricity prices could reduce the gross operating surplus by 7.7 to 8.4 billion euros this year, the group estimated based on the current market prices. The energy company has, at the same time, reduced its production forecast, in particular because of the difficulties encountered by its Penly power plant, in Seine-Maritime. The group will have to buy this production deficit at a high price on the market, which will further deteriorate the 2022 accounts. For JPMorgan, a recapitalization will be necessary.