(Boursier.com) — The Parisian market is starting the year in the red. The CAC40 fell by 1.60% over five sessions, to 7,421 points this Friday evening. Somewhat logical profit taking after the incredible end of the 2023 financial year. Operators have quite clearly adjusted their expectations of a reduction in Fed rates over the first part of the year after a series of statistics far from reflecting an economy in recession.
While awaiting data on American inflation, which will be published on January 11, investors have notably noted an increase in job creation for the fourth consecutive month, thanks to a strong increase in hiring in the leisure sectors. and the hotel industry. The US Department of Labor reported 216,000 non-agricultural job creations last month, while economists forecast only 170,000 on average. The unemployment rate, however, remained stable at 3.7%, and the increase in average hourly wages showed the same progression as in November (+0.4%).
In the euro zone, annual inflation rebounded in December. The consumer price index increased by 2.9% last month in the region, after +2.4% in November. This data appears to confirm the ECB’s forecast that inflation bottomed out in November and is now expected to stagnate in a range between 2.5% and 3% this year, before slowing again in 2025. Traders The market forecasts six ECB rate cuts this year, with a first reduction in borrowing costs in March or April, but central bankers say price pressures remain high and inflation is not still under control.
Next week, the micro will return to the forefront with the start of the quarterlies. As usual, the big Wall Street banks will kick off the season. In France, Sodexo has not had any unpleasant surprises.
On the oil market, black gold prices are off to a good start to the year (+3% over the week for WTI), benefiting from the tense situation in the Middle East. In addition to fears of an escalation of conflict in the region, attacks by Yemeni Houthi rebels in the Red Sea add a dose of uncertainty.
On the currency front, the euro remains close to $1.10 against the greenback. Finally, Bitcoin is trading around $43,500 on Coindesk.
VALUES
* Sanofi increased by 4.1%. Wolfe Research has upgraded its recommendation on the pharmaceutical giant to ‘outperform’, targeting 105 euros. The broker mentions a good entry point. He describes the company as “steady growth”, mainly driven by Dupixent, but also due to a significantly lower number of patent expirations compared to its peers through the early 2030s. Jefferies further reiterated its ‘buy’ opinion and its target of 115 euros.
* Sodexo gained 3.5% after a quarterly publication generally in line with analysts’ expectations. The collective catering group announced a turnover of 6.3 billion euros for its first quarter of 2024, up 3.1%, including a negative exchange rate effect of -4.8% and a contribution of acquisitions net of disposals of -0.3%. Internal growth stood at +8.2%. The firm confirmed its outlook (excluding Pluxee) for the 2024 and 2025 financial years, namely internal growth between +6 and +8% per year and an improving margin of +30 to +40 basis points per year, at a rate constant.
* Danone rose 3.1%, the highest level since April 2023. The agri-food giant, which remains in the green for ten consecutive sessions, benefits like its peers from a rotation of investors towards more defensive values. Barclays also raised its target price from 70 to 72 euros while remaining ‘overweight’. Nielsen’s December data reinforces the broker’s confidence in the turnaround of Danone’s Essential and Plant-Based Dairy Products (EDP) business.
* Agricultural credit advance of 3.1%. The green bank was supported by a note from KBW which raised its recommendation on the file to ‘market performance’, targeting 15.5 euros compared to 13.5 euros previously. The market is quite divided on the financial institution since, according to the ‘Bloomberg’ consensus, 7 analysts are ‘positive’, 13 are ‘neutral’ and 3 are ‘negative’. The average twelve-month objective is set at 14 euros.
Conversely, * Remy Cointreau collapses by 16.6%. The selling pressure on the spirits group, which has been at its lowest level since May 2020, is linked to information from China to the extent that the Chinese Ministry of Commerce announced the launch of an anti-competitive investigation into spirits. -life of wine, such as cognac, imported from the European Union. The investigation by Chinese authorities followed a complaint from the China Alcoholic Beverage Association on behalf of the local wine spirits industry, the ministry said. “The sector has already been downgraded but these measures could dissuade some investors from taking an interest in it again,” Gilles Guibout, portfolio manager at Axa Investment Managers, told ‘Bloomberg’. “Pernod has already sent a message of caution regarding its next release.” “There are of course concerns at the macro level with the continued slowdown in growth in China, but what also weighs on investor morale is the regulatory and political risk,” indicates Emmanuel Cau, head of the of European equity strategy at Barclays. “Regulatory opacity is likely to continue to fuel pessimism, particularly towards the alcohol sector, which has been under pressure for some time.”
* Atos fall of 10.6% as the company discusses again with Airbus with a view to selling BDS to it. Atos plans to open a due diligence phase with the European giant, whose indicative offer for the entire BDS scope shows an EV of 1.5 to 1.8 billion euros. Currently at a preliminary stage, discussions with Airbus will progress and the market will be informed of their outcome in due course. Airbus had already shown interest in acquiring a 29.9% stake in Atos’ digital and cybersecurity business before abandoning the project last March. The aeronautics group said then that it remained open to a strategic partnership with Atos.
Furthermore, Atos does not rule out additional asset sales, particularly if the transaction with EPEI does not go through. On this subject, the firm emphasizes that exclusive negotiations are continuing with EPEI on the sale of Tech Foundations. “Discussions are continuing on the price to pay, the structure of the operation and the transfer of a very large part of the liabilities attached to Tech Foundations. As with all negotiations, there is no certainty that they will result in a deal “. In addition, “evolving conditions and market reactions require reducing the initially planned size of Eviden’s capital increase. Furthermore, the company is examining with EPEI the legal and financial conditions under which EPEI could be released , in whole or in part, of his commitment to participate”.
* STMicro falls by 9.4% and Soitec loses 8.4%. STMicro and the entire chip industry were weighed down by Mobileye’s warning. The autonomous technology company has warned that its 2024 revenue will be well below analysts’ expectations. Mobileye also said its first-quarter revenue is expected to fall by about 50% due to excess inventory from its customers. Estimating an oversupply of 6 million to 7 million units of its top revenue-generating product, the EyeQ advanced driver-assistance chip, Mobileye expects first-quarter profit to be “significantly lower than quarters following”. “As supply chain concerns have eased, we expect our customers to use up most of this excess inventory during the first quarter of the year,” according to the company.
* Worldline gives up 8.3%. It must be said that Barclays has downgraded the title of the payment specialist to ‘online weighting’, with a price target raised from 12.2 to 14.2 euros. Worldline has “no real positive catalyst imaginable” in 2024, the bank says. In Worldline’s core merchant services business, the company’s decision to cut ties with thousands of higher-risk merchants will result in a bigger drag on revenue starting in the fourth quarter, the analyst said. From a free cash flow perspective, “the period will be particularly difficult” due to the high costs associated with the restructuring program.
* Alstom plunges 7.9%. To be ‘underweight’ on the railway giant, Barclays reduced its target from 8.5 to 8 euros. The bank’s analysts see “persistent problems with no obvious solutions” in a broader sector note on European capital goods companies, advising a cautious approach to the industrial group. The broker cites a “clear disconnect” between the stocks of capital goods manufacturers, which are currently pricing in accelerating profit growth amid an easing macroeconomic outlook through 2024. “We believe the consensus is overly optimistic about top-line growth and probably doesn’t fully take into account cyclical headwinds.”