(Boursier.com) — Shortened week but week of consolidation for the Parisian market with the CAC40 losing 1.75% to 8,061 points this Friday evening. European indices, like American ones, were caught up on Thursday by the uncertainty surrounding the Fed’s monetary policy timetable after rather ‘hawkish’ comments from several members of the Institution.
Neel Kashkari, the president of the Minneapolis Fed, notably suggested that the rate cut was not assured this year. If inflation remains pressing, the official envisages a continuation of the monetary status quo rather than the start of easing. “There is a lot of momentum in the economy at the moment,” said the official, who had nevertheless considered two rate cuts this year during last month’s monetary meeting.
The monthly employment figures revealed this Friday tend to go in this direction since the world’s largest economy created 303,000 non-agricultural jobs after 270,000 in February, while economists polled by Reuters predicted on average only 200,000. These significantly more job creations than expected were accompanied by an acceleration in wage growth, of 0.3% in March, after +0.2% in February, while the unemployment rate fell to 3 .8% after 3.9%. Not enough to argue for an imminent reduction in rates…
In Europe, on the other hand, the good news is being confirmed regarding inflation, while a consensus around a rate cut in June begins to emerge within the governing council of the European Central Bank. The euro zone’s annual inflation rate stood at 2.4% in March, compared to 2.6% in February according to Eurostat’s flash estimate… The consensus was positioned at +2.5%. In addition, the region returned to growth in March. At 50.3 compared to 49.2 in February and 49.9 in the first estimate, the seasonally adjusted HCOB composite PMI index of overall activity has in fact reached its highest level in ten months and is therefore returning to the expansion zone for the first time since May 2023.
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The week was also marked by the sharp rise in oil prices against a backdrop of escalating tensions in the Middle East and constrained production. The global benchmark, Brent (contract for June delivery), is trading at $91 in London, the highest level since October. The ounce of gold, for its part, reached a new high at more than $2,318. Finally, on the currency front, the euro remains anchored below $1.085 against the greenback.
On the values front, news remained quite limited pending the next quarterly period. Atos and Renault nevertheless got people talking while Solutions 30 was heckled.
VALUES
* Maurel&Prom soars by almost 10% in the wake of oil prices.
* Neoen climbs 9.2%, while the group could sell 30% of its activities in Australia in order to raise funds to finance its growth in the country. According to ‘Bloomberg’ sources, this operation would be part of Neoen’s plan to develop in Australia and elsewhere beyond 2025 without resorting to a new sale of shares by the parent company. According to the ‘Australian Financial Review’, Neoen would work with Bank of America on this deal which could allow it to raise up to $1.6 billion. The operation could take place in the second half of the year, even if no final decision has been made, specifies one of the agency’s sources.
* Solvay jumped 7.8%, sought after the declarations of David Einhorn. The founder of Greenlight Capital, already a shareholder of the chemical group, highlighted the low valuation of the company and the “above average” management of the company. “We believe this boring essential chemicals business will generate attractive, risk-adjusted returns for investors,” the specialist said, as quoted by ‘Bloomberg’, at the ‘Sohn Investment Conference’ in New York. Solvay has seen a 43% jump since splitting from chemical maker Syensqo last December.
* ViewGroup advances 6.5% after presenting solid annual results. The title of the world number 1 in commerce digitalization solutions has returned to positive territory since the start of the year. With an order book at an all-time high, the group benefits from a high level of visibility and confidence in its objective of crossing the billion-euro turnover milestone in 2024. The company also aims to continue improving its profitability with an adjusted Ebitda margin expected to increase from 50 bps to 100 bps in 2024 and cash flow to remain positive.
* Renault climbs 6.5%. Martin Lundstedt, CEO of Volvo AB, does not rule out the possibility of closer ties with the French carmaker in the future, beyond the existing partnership in electric vans. The question of going beyond the Flexis e-vans joint venture is legitimate, declared the manager on the sidelines of an event in Boulogne Billancourt. The current environment is a question of “ecosystems and partnerships”, according to the Volvo boss quoted by ‘Bloomberg’. Currently, Volvo and Renault are “two strong independent companies”, focusing on the Flexis joint venture. “Let’s see how this goes,” Lundstedt stressed.
* TotalEnergies gained 5.4%, at a historic high. Like the oil sector, the energy giant has been sought after as crude prices are at their highest level in five months against a backdrop of increased geopolitical risks in the Middle East and tightening global supply.
* Atos increases by 2.5%. The ESN will present the parameters of its refinancing framework to its financial creditors next Monday, April 8 at 5:00 p.m. CET. Atos will provide market information on Tuesday April 9 before the markets open. Participants will not be subject to trading restrictions due to the presentation following this information to the market already planned. Oddo BHF does not believe thatAtos could be nationalized, although he is not surprised that the French government is closely monitoring the struggling company. BPI, the national public investment bank, could participate in a capital increase, but the broker believes that the State will put pressure for its strategic activities to be sold to a French player and/or for such a player to become the reference shareholder after the restructuring. Onepoint appears to be a credible option, according to the broker.
Conversely, * Solutions 30 decrease by 10%, sanctioned after the presentation of its annual accounts. The European leader in solutions for New Technologies remained in the red last year despite an organic turnover increase of 16.5% to €1.057 billion. Adjusted EBITDA jumped 59.6% to €74.6 million, with the 2023 financial year thus confirming the clear recovery in the adjusted EBITDA margin, to 7.1% compared to 5.2% in 2022. In 2024, management is counting on a new year of revenue growth with continued improvement in the adjusted EBITDA margin.
* Air France KLM returns 7.1%, penalized by the rise in black gold prices. Oddo BHF also confirmed its ‘underperformance’ opinion on the group with a target reduced from 10.5 to 9 euros. Covid reimbursements and the rise in Brent prices are putting pressure on cash with an adjusted FCF now expected at €2.8 billion cumulatively over the 2024-2026 period while the broker estimates that the benefits of the 2028 plan will be concentrated on the end of period. He notes, however, that we see a slight brightening with an improvement in CASK momentum expected from Q2.
* L’Oreal (-6.1%) reportedly has its sights set on the Omani luxury perfume company Amouage. According to people close to the matter cited by ‘Bloomberg’, the cosmetics giant is in talks to take a minority stake in this Gulf group. The owner of Amouage, the conglomerate SABCO Group, would have cited a valuation of the company of more than 3 billion euros for any transaction, according to sources. Amouage’s retail sales have more than doubled in the past three years to more than $210 million in 2023. There is no certainty that deliberations will result in a transaction and the details of the potential deal could still change, according to sources. Amouage could also attract interest from other investors.
* Pernod Ricard fell by 5.9%. The news around the spirits group was marked by a note from Oddo BHF which downgraded the file to ‘neutral’ while cutting its target from 190 to 150 euros. The catalysts that the broker expected to support the stock’s performance, namely the recovery in the group’s key markets such as China and the US, have not materialized. The deadline for resuming the group’s growth is regularly postponed. Deutsche Bank, for its part, reduced its target from 140 to 135 euros while remaining ‘keep’.
* Remy Cointreau yields 5.2% after the announcement of the renewal of its syndicated credit line “RCF” for an amount increased to 180 million euros and a duration of 5 years (maturity March 2029) with two extension options, one year each, subject to lender approval.