(Boursier.com) — Very good week for the Parisian market. Over five sessions, the CAC40 rose 3.7% to 6,516 points this Friday evening. Traders have been reassured by the latest economic data which appears to confirm that US inflation has now peaked while consumer spending remains strong. The publication of the minutes of the last meeting of the US Federal Reserve also suggests that the Fed could slow down, or even suspend, the pace of its monetary tightening during the course of the year, thus dispelling fears of recession. A sign of renewed optimism in the markets, the Vix, the famous ‘fear index’ has returned to the 25 mark.
As for the ECB, Christine Lagarde indicated this week that the institution was probably in a good position to exit negative rates by the end of the third quarter. As inflation hits historic highs in the Eurozone, comments from the ECB President suggest that the Bank may make two 25 basis point rate hikes at its next two meetings in July and September and move them into positive territory by the end of September.
Despite this weekly surge, which allows Wall Street to end its longest downward streak since 2001 (7 consecutive weeks of decline), a relapse in the indices cannot be ruled out next week. Concerns related to the consequences of the war in Ukraine, the surge in prices and more restrictive monetary policies on the global economy and companies are indeed still very present.
In the oil market, the WTI (July futures contract) is trading around $114 on the Nymex, while the Brent of the North Sea due July is moving close to $117.5. Oil prices benefited from the anticipation of strong demand for fuels in the United States, where the summer holiday season is approaching, as well as in China, where the restrictions linked to Covid are gradually being lifted.
After its recent setbacks, the bitcoin still struggling to find the threshold of $30,000, registering close to $28,700. It remains far from its November 2021 record at nearly $69,000.
VALUES
* Company of the Alps soared by more than 21%, investors having logically welcomed the increase in the annual guidance after half-year results well above analysts’ expectations. “While a return to pre-crisis revenue and OMDA levels was expected in 2022/2023, the dynamic level of activity combined with the Group’s efforts to contain costs and accelerate the implementation initiatives aimed at promoting demand, allow us to envisage, from this financial year, a turnover and an EBITDA higher than those of the reference financial year 2018/2019”, indicated the management.
* Faurecia (+9.6%) could part with certain “non-essential” assets after having finalized the acquisition of the German Hella GmbH. According to people familiar with the matter quoted by ‘Bloomberg’, the automotive supplier is working with advisers on the possible sale of its emissions control unit and Hella’s ‘special applications’ division. The former could fetch around 500 million euros, while the latter could be valued up to 1 billion euros, according to the agency’s sources. Deliberations are ongoing and no final decision has been made.
Alstom wins 8.6%. Jefferies says investor sentiment towards Alstom is turning positive after the stock fell 44% in the past year. The train manufacturer is up around 25% against the ‘Stoxx Europe Industrial Goods & Services’ index over the past month, and management has expressed confidence in achieving the level of FCF anticipated by the consensus on the 2023 financial year. The recent investor day also showed that the company has better control of the backlog resulting from its merger with Bombardier Transportation, and most of the headwinds are now understood, such as the accumulation working capital and the impact of exposure to Russia. On the ‘purchase’ on the file, Jefferies adjusts its target from 36 to 35 euros.
* Agricultural credit gained 8.3% after Christine Lagarde’s latest remarks which paved the way for a first rate hike by the ECB in July.
* TotalEnergies advance of 6.1%. The energy giant has announced the signing of agreements with Global Infrastructure Partners (GIP) for the acquisition of 50% of Clearway Energy Group (CEG), the fifth player in renewable energies in the United States. The French group intends through this operation to accelerate its growth in the renewable energy sector. “As part of this transaction, GIP will receive 1.6 billion dollars (1.5 billion euros) in cash and a 50% stake less one share in the subsidiary of TotalEnergies which holds 50.6% in SunPower” , the American subsidiary of the French group specializing in residential solar, specifies the management. This acquisition brings TotalEnergies’ total renewable energy capacity in the United States to more than 25 gigawatts.
* Sodexo nibbles 0.8% after having finally given up opening the capital of its “Benefits & Rewards Services” activity. The collective catering group’s Board of Directors considered that it did not create enough value and therefore decided to define a new roadmap to accelerate the development of the activity, without saying more.
Conversely, * Houses of the world fall of 23.2%, logically sanctioned after his big warning on results. Due to the sharp deterioration in the macroeconomic environment and supply conditions, the home decoration and furniture specialist now only anticipates a 2022 EBIT margin of 5% or more, against around of 9% previously, while sales are expected to decline in mid-single digit negative against an increase expected so far. Free cash flow should be within a range of 10 to 30 ME, against 65 to 75 ME previously targeted. Despite weak demand, the Group is determined to support the development of its sales via short and medium-term action plans. It also seeks to protect its profitability through rigorous cost control, while continuing to develop its medium-term plan.
* Air France-KLM drops 11.6%, penalized by the forthcoming launch of a capital increase of 2.256 billion euros. This operation, with shareholders’ preferential subscription rights, will consist of the issue of 1,928 million new shares at the rate of 3 new shares for 1 existing share at a unit price of 1.17 euro. The French and Dutch States, which respectively own 28.6% and 9.3% of the group’s capital, will subscribe to this operation in order to maintain their participation at its current level. The maritime transport company CMA CGM will participate to the tune of 400 million euros, as announced last week during the presentation of its alliance with Air France-KLM. China Eastern Airlines (owner of 9.6% of the capital) and Delta Air Lines (5.8%) will also subscribe but will see their participation diluted because they will only invest the proceeds of the sale of subscription rights sold to CMA CGM .
* Publicis yields 5.2%. The title of the communication group paid the price for a note from Morgan Stanley which downgraded the value to ‘underweight’ with a target reduced from 54 to 48 euros. The deceleration in global GDP growth will likely be similar to that following the bursting of the dotcom bubble, when organic growth at WPP and Publicis fell 20 percentage points and multiples were compressed by 70% , says the bank. The anticipated quarterly organic growth for WPP and Publicis will turn negative in the second half of 2022/early 2023, adds the broker.
* JCDecaux stumbles 4.8%, weighed down by a note from JP Morgan which has degraded the value to ‘underweight’ with 16.6 euros in the viewfinder. For the US bank, JCDecaux, Schibsted and Auto1 are the three names to avoid in the European sector amid fears of rising interest rates and weakening consumer budgets. According to the broker, advertising budgets are rapidly being reduced due to macro uncertainties, which will quickly translate into downward pressure on advertising revenue streams.
* Vallourec makes 3%. A drop to be linked to information from ‘Bloomberg’ which mentioned a private placement of 13.7 million shares from several funds (Strategic Value Partners, Red Maple, Kings Forest, Rathgar and Queens Gate). The shares would have been sold at a unit price of 12.2 euros, materializing a discount of 12.5% compared to the closing price preceding the announcement.