(Boursier.com) — Another very complicated week for the stock markets with a CAC40 which dropped 4.92% over five sessions in Paris, to 5,883 points this Friday evening. One of the index’s worst weekly performances since March 2020 and the outbreak of the coronavirus pandemic. The announcement of a new accelerated tightening of the American, Swiss and British central banks in the face of galloping inflation has revived the specter of a global recession, pushing bond yields back to record levels and plunging several indices into the zone of bear market.
The US Federal Reserve on Wednesday raised its main key rate by 75 basis points to bring it between 1.50% and 1.75%, the first gesture of such magnitude since 1994! The Fed has also signaled its intention to continue to raise this “fed funds” rate to 3.4% at the end of 2022, then to 3.8% at the end of 2023, in order to curb inflation that it has long underestimated. .
In the euro zone, where the money markets anticipate a 190 basis point hike in European Central Bank rates by December, inflation was confirmed on Friday at 8.1% in May over one year, its highest level. history, according to Eurostat figures. Faced with soaring interest rates and the growing risk of a new debt crisis, the ECB convened an emergency meeting on Wednesday, after which it decided to appoint the relevant Eurosystem departments and the ECB services to speed up the development of a new anti-fragmentation instrument. The yield on Italian ten-year debt hit 4.27% on Tuesday, its highest level since early 2014, a level 250 basis points higher than that of German debt.
On the oil market, crude posted a loss of about 6% over the week but remained above $112. The bitcoin has all the trouble in the world to preserve the psychological bar of $20,000 while the euro is moving below $1.05 against the greenback.
VALUES
* Orange withstood strong bearish pressure in the markets this week with the stock up 1.6%. The telecom operator was supported by a note from Bernstein who raised to ‘outperform’ its recommendation on the value by targeting 13 euros. The market is mostly positive on the issue since, according to the ‘Bloomberg’ consensus, 18 analysts are ‘buy’, 7 are ‘hold’ and 3 are ‘sell’. The average 12-month target is set at 12.65 euros.
Conversely, * Atos is the dunce cap of the week on the SBF120 with a fall of around 40%! Long-awaited, the presentation of the new strategic plan has finally weighed down a title that has been in dire straits for many months. The digital services specialist announced its upcoming split into two separate listed companies: SpinCo (Evidian), which would concentrate Big Data and Security (BDS) activities and would be led by Philippe Oliva, and Tech Foundations (TFCo, Atos), bringing together the group’s declining historic IT services activities. This split would “unleash value” as part of a larger plan estimated to cost 1.6 billion euros in 2022-2023. Rodolphe Belmer, who arrived at the head of the group at the start of the year, is already going to leave the ship because he has not been able to convince his Board of Directors. The departure of the former boss of Eutelsat was announced an hour before the “capital markets day”, which investors hoped would restore confidence, after a series of setbacks which melted the stock market value of Atos by two-thirds over the past year.
* Valneva stumbles by 24%, while the agreement with Brussels around its vaccine against Covid-19 is clearly in the dark… After having received the European Commission’s notice of intent to terminate the agreement supply of its inactivated vaccine against Covid-19, Valneva has submitted “a remediation plan which is under discussion with the Commission and the participating Member States”. “Some Member States have confirmed their interest in including an inactivated and adjuvanted whole virus vaccine solution in their portfolio. However, the preliminary and non-final volume indications received from the Commission would not be sufficient to ensure the sustainability of the vaccine program against Valneva’s Covid-19. This would also impede the future development of the program beyond the current product profile. If these indications were confirmed, Valneva would not be able to enter into an amendment to the supply agreement in order to a reduction in volumes ordered, and the European Commission would likely terminate the agreement. As a result, Europeans would not have access to Valneva’s inactivated vaccine, VLA2001”, detailed the laboratory.
* Air France-KLM gives up 21% after the success of its capital increase with preferential subscription rights, the launch of which was announced on May 24, 2022. At the end of the subscription period, the company raised nearly 2.26 billion euros. The operation was oversubscribed with a subscription rate of approximately 116%. The net proceeds of the issue will be allocated mainly to the accelerated repayment of State aid and the reduction of related financial costs, as well as to the reduction of Air France-KLM’s net debt. The French and Dutch States participated to the extent of their rights, their participation remaining unchanged, thus reiterating their confidence in the performance of Air France-KLM. CMA CGM has become a new strategic reference shareholder with a 9% stake in Air France-KLM.
* Elior lost 12.8% in a context marked by serious concerns about inflation and rising interest rates which affect a group still looking for a new CEO after the unexpected departure of Philippe Guillemot. “Inflation is a concern and rising interest rates will also have an impact” on Elior, explained to ‘Bloomberg’ Florent Thy-Tine, analyst at Midcap Partners. The departure of the former CEO, announced on March 1, adds further uncertainty for a collective catering company which has not fully recovered from the pandemic.
* Eurofins Scientific plunged 11.7%, on a low of more than a year. SocGen is notably at the origin of this downward pressure on the file since the bank downgraded the title to ‘keep’ while cutting its target from 111 to 80.4 euros. Despite this reduction, the market remains mostly positive on the analysis laboratory since, according to the ‘Bloomberg’ consensus, 10 analysts are on the ‘buy’ side, 8 on the ‘hold’ side and only one on the sell side. The average 12-month target is set at 99.67 euros.
* Casino down by 11.3% as the distributor plans to simplify and increase the clarity of its legal organization in France by placing all of its food distribution subsidiaries – mainly Franprix, Monoprix, Distribution Casino France, Easydis and AMC – under a joint holding company 100% owned by Casino, Guichard-Perrachon. The reporting segments and the management structure of the Group would remain unchanged.
* EDF down 5.5%. “All options are on the table” when it comes to the future ofEDF, said on Tuesday on ‘BFM TV’ the French Minister of Economy and Finance, Bruno Le Maire, when asked about a possible nationalization of the electrician. Almost 84% controlled by the French State, EDF is faced with significant financial needs to invest while the group is already heavily indebted. In March, EDF carried out a capital increase of 3.1 billion euros, to which the State subscribed up to 2.7 billion euros, and intends to sell 3 billion euros of assets by 2024, as it seeks to shore up its finances.