(Boursier.com) – The Paris market started back this week, posting a weekly decline of 2.17% to 6,077 points on Friday evening. Risk aversion escalated again after the release of stronger than expected US inflation figures in August. The absence of any new signs of a slowdown in consumer prices in the world’s largest economy has indeed called into question the most flexible scenarios in terms of interest rates and growth. The markets are now widely expecting a 75 basis point hike in Fed rates next Wednesday, while a 100 point hike, so far absent from the debates, is now far from being ruled out.
In addition, two of the world’s largest institutions, the International Monetary Fund and the World Bank, said Thursday evening that they expect an increased risk of an economic slowdown in the third quarter and a global recession next year, respectively. On Friday, the warning from the logistics and parcel delivery giant Fedex, considered a reliable barometer of global economic activity, further reinforced the ambient gloom.
In Europe, after the historic 75 basis point tightening of the ECB last week, the comments of several members of the European Central Bank point in the direction of further significant monetary tightening next month. The Vice-President of the ECB, Luis de Guindos, for example, declared on Friday that the Frankfurt Institution will have to continue its rise in interest rates because the economic slowdown or a possible recession in the euro zone will not be sufficient to achieve inflation control.
In this context, bond yields have risen sharply in recent days, like that of the two-year German Bund, which reached a peak since 2011 at 1.594%. And the dollar continued to take advantage of its status as a safe haven to gain further ground against the main world currencies. The euro is moving close to parity this Friday evening.
On the commodities front, the barrel of crude posted another slight drop over the week ($86 for WTI) and is moving close to its levels at the start of the year. Fears of falling demand against a background of economic slowdown, or even recession, continue to weigh on prices. An ounce of gold is trading around $1,675 and Bitcoin is moving close to $19,700 on Coindesk.
In business news, Orpea experienced another dark week on the stock market as the laboratories dedicated to animal health Virbac and Vetoquinol were penalized after their latest results.
VALUES
* Renault climbed nearly 9% with Stellantis (+0.8%). Improvement in the European car market. While in July new car registrations in the European Union fell again by 10.4% despite an already weak comparison base caused by the persistent shortage of semiconductors, the European new car market has returned to growth (+4.4%) in August, ending thirteen consecutive months of decline. However – with 650,305 units registered – this result remains well below pre-pandemic levels, specifies the Association of European Automobile Manufacturers. All key EU markets contributed positively to growth in the region, with solid gains in Italy (+9.9%), Spain (+9.1%), France (+3.8%) ) and in Germany (+3.0%). At the builder level, Stellantis (+10.6%) did significantly better than Renault (-6.99%) in the EU.
* Mercialys gains 4.9%. The real estate dedicated to shopping centers was notably supported by a note from Oddo BHF which raised to ‘outperform’ its opinion on the file with an adjusted target of 9.8 to 102 euros. The analyst notes that after a meeting with the management, the leaders approach this return by underlining a lack of visibility on certain impacts of the inflationary context, like many other companies, but are also confident about Mercialys’ ability to go through this potentially difficult time.
* Euroapi takes 4.2%. Listed on the stock market in May at a price of 12 euros, the specialist in active pharmaceutical ingredients on behalf of health manufacturers benefited from the support of Deutsche Bank, which revalued the stock from 20 to 22 euros while confirming its advice to the ”purchase’. Following better-than-expected half-year results, the investment case has moved up another notch in the bank’s preference list as it offers several features that should make it very attractive to investors.
* Technip Energies advance of 3.6%, also boosted by an analyst’s note. At the ‘purchase’, Citi has indeed revalued the title of the Engineering and Technologies group from 15.5 to 17 euros. The bank believes the company has an “abundance of opportunity” to fill its backlog after removing the Russia Arctic LNG-2 project from its portfolio. In particular, it sees great opportunities in LNG in the United States and the Middle East. As for the stock, it is around 20% below its all-time highs, and the company remains discounted compared to its European peers.
Conversely, Orpea fall of 32%, the lowest since June 2005. The specialist in retirement homes and care was still strongly shaken this week after announcing a drop in its profitability in the first half, and warns of a probable deterioration of the latter in the second semester. If the group saw its turnover increase by 10.9% to 2.295 billion euros over the first six months of the year, its EBITDAR margin rate fell to 18.5% (24.9% one year earlier). “Orpea has decided to bring forward the release of preliminary first-half results for transparency reasons, as 2022 results are likely to be significantly below market expectations,” Chief Financial Officer Laurent Lemaire said in a conference call with senior executives. journalists. Operating profitability is affected by the reduction in compensation mechanisms relating to Covid-19 and by the increase in food, energy and salary prices. Among analysts, SocGen cut its target from 36.5 to 18.5 euros while maintaining its ‘hold’ opinion. Oddo BHF (‘neutral’) believes that the stock remains surrounded by too much uncertainty, or at least a lot of short-term brakes (inflation, TO, shortage, possible regulatory changes, pricing) which limit visibility on the forecast sequence …
* Virbac drops by 17.4%. The veterinary laboratory has however unveiled good half-year results and confirmed its 2022 objectives. Only the debt reduction objective for the year has been revised downwards (around 30 ME excluding dividends against 60 ME previously) due to the increase in the working capital requirement linked to the growth of the activity, to inflation, as well as to management decisions. The ratio of “current operating income before amortization of assets resulting from acquisitions” to “revenue” was, on the other hand, confirmed at around 15% at constant exchange rates, despite the impact of inflation, and the organic growth guidance (between 5% and 10%) was reiterated.
* Atos loses 11.1%. Sycomore Asset Management, which holds a minority stake in the group formerly headed by Thierry Breton, is asking for the resignation of its chairman, Bertrand Meunier. Cyril Charlot, founding partner of the management company, also told ‘Reuters’ on Friday to ask for the replacement of the oldest members of the board of directors by specialists in the sector. Sycomore AM judges that the Atos split project is “too ambitious and too complex”…
* Dassault Systems stumbles 8.6%, with Worldline (-8.4%) and Capgemini (-7.3%). Like the major American tech stocks, technology stocks are neglected against a backdrop of soaring bond rates.
* Air France-KLM fell 9%, notably affected by the air traffic controllers’ strike on Friday. While the General Directorate of Civil Aviation (DGAC) had asked airlines to reduce their flight schedule by 50% on this day, Air France planned to operate around 90% of its long-haul flights and 45% of its short and medium-haul flights.