(Boursier.com) — And four! The CAC40 posted a fourth consecutive week of decline (-0.80%), at 7,004 points this Friday evening. A decline which may however seem limited in the current heavy atmosphere. The war in the Middle East has logically weighed on the morale of those involved while fears of a conflagration in the region seem to grow every day. Concerns which have caused a surge in oil prices while Iran’s attitude is being monitored very closely.
A further escalation of the conflict in the Middle East could bring Israel into direct combat with Iran, a supplier of arms and money to Hamas, which the United States and the European Union have designated a terrorist group. In this scenario, Bloomberg Economics estimates that oil prices could rise to $150 a barrel and global growth would fall to 1.7%, a recession that would take about $1 trillion off global production. “The situation in Israel is horrible, and if it turns into a regional conflict, the human costs will increase exponentially, and the financial costs around the world will also start to grow very, very quickly,” Matt told the agency. Maley, market strategist at Miller Tabak + Co. “We’re actually surprised that the level of complacency in the stock market remains as high as it does now.”
Another subject of uncertainty, the future trajectory of the Federal Reserve’s monetary policy after slightly stronger inflation data than expected in the United States in September. Note, however, that the market welcomed the speeches of several members of the Fed discussing how the tightening of financial conditions in a context of higher yields could make a further increase in the Bank’s rates less critical or necessary. Yesterday, Governor Christopher Waller explained, in turn, how tightening financial conditions would do part of the Fed’s job, minimizing the need to raise rates further. According to the CME Group’s FedWatch tool, the probability of a monetary status quo on November 1, following the next meeting, is now over 92%.
Finally, the situation in China does not seem to be improving. Inflation data, released Friday, showed sluggish price dynamics, confirming the lack of strength in demand in the world’s second-largest economy despite multiple, but small, stimulus packages from the local government.
On the positive side, JP Morgan Chase, BlackRock, Citigroup And Wells Fargo launched the quarterly season on Wall Street by revealing solid results. Just like Publicis in France. Euroapi and Sartorius Stedim Biotech, on the other hand, were sanctioned after their profit warning, while LVMH’s publication confirmed a certain return to normal in the luxury sector.
On the currency front, the euro remains close to $1.05. Finally, Bitcoin is moving around $26,750 on Coindesk.
VALUES
* Thales And Dassault Aviation climbed by 12.8% and 8.1% respectively. The Palestinian Islamist movement Hamas launched the largest attack against Israel in decades last weekend, triggering a response in the Gaza Strip, but also in southern Lebanon. The human toll of the conflict between Israel and the militant group continues to mount as the war continues. Investors are worried about an extension of the fight to other countries in the region, including Iran, and the impacts on oil markets.
* Fnac Darty wins 8.9%. It must be said that the distributor of cultural products won an important legal victory yesterday in England. The London Court of Appeal finally rendered a judgment in favor of Fnac Darty in the context of the dispute linked to the sale of Comet Group by Darty in 2012. Fnac Darty should thus receive, by the end of the year, the entire amount initially paid as well as reimbursement of procedural costs incurred and interest. The impact on cash flow is estimated at around +130 million euros. TP ICAP Midcap (‘conserve’) speaks of good news in the current context. The decision will allow the group to boost its cash flow at the end of the financial year.
* TotalEnergies takes 4.7%, CGG gains 7.7% and Vallourec advance of 8.9% in the wake of crude prices.
* Publicis logically benefits from its good quarterly publication to rise by almost 5%. The group led by Arthur Sadoun has once again raised its annual guidance after achieving a better-than-expected third quarter thanks to good momentum in the USA but also media activities and Epsilon. “Better offer, better mix, better growth, better margin and better balance sheet,” summarize JP Morgan analysts. Citi (‘buy’) notes that consensus upgrades may not be massive, but the stock’s multiples still look low compared to other service or advisory models. The company is seeing pressure on project-based work and a slowdown in technology-related end markets, but exposure to these pockets is lower than peers and its media and creative businesses have been resilient .
Conversely, Euroapi collapses 56% after its big profit warning. The manufacturer of active pharmaceutical ingredients now expects annual growth of between +3% and +5%, compared to +7% to +8% previously. Euroapi explains this slowdown by lower sales than expected in the fourth quarter for the CDMO activity or by inventory reduction programs with certain customers for API Solutions. The Core EBITDA margin is now expected to be between 9% and 11%, compared to 12.5% and 13.5% previously expected. The investment objectives remain unchanged, and are between 120 and 130 million euros. Investors will likely stay away at least until the end of the company’s strategic review, writes Morgan Stanley, which reduces its target from 13 to 10.5 euros.
* Orpea drops almost 20% after its half-yearly point, marked by a net loss widening to -371 ME. Furthermore, for the whole of 2023, management now estimates, based on the work carried out to date, that Ebitdar should be at the bottom of the range of 705 ME – 750 ME, made public last July. Orpea mentions an increase in costs that has not been fully absorbed by price increases. The company will publish its updated medium-term outlook at the beginning of November at the same time as the publication of its 3rd quarter revenue. The firm also recalled that as part of its financial restructuring, the 3 upcoming capital increases will lead to a massive dilution of existing shareholders: “they could lead to a significant drop in the stock price, the value of the share after operations which may be less than 0.02 euros”.
* Sartorius Stedim Biotech drops by 18.2%, sanctioned after its warning on results. The laboratory equipment manufacturer now expects to record a drop in its turnover of nearly 19% (-14% excluding items linked to Covid-19), compared to a decline “of a percentage between the low and the middle of the tens range. Due to lower volume forecasts and product mix effects, the current EBITDA margin is now expected to be slightly above 28%, compared to around 30% previously targeted and 35% last year. Over the first nine months of the year, the group recorded consolidated turnover of around 2.069 billion euros, down nearly 19% at constant exchange rates. Management expects profitable growth in 2024 and will give quantitative indications when publishing the figures for the year 2023 in January 2024. Its medium-term ambition until 2025 is currently under study and an update update will also be provided in January 2024.
Valeo stumbles by 12.3%, weighed down by an analyst note. Kepler Cheuvreux downgraded the title of the automotive supplier to ‘keep’ while reducing its target from 25 to 17 euros. The market is now quite divided on the stock since, according to the ‘Bloomberg’ consensus, 10 analysts are ‘buy’, 10 are ‘hold’ and 1 is ‘sell’. The twelve-month average target is set at 21.76 euros.
* LVMH fell by 9.5% after a publication considered disappointing. As expected, the world’s number one luxury brand saw its growth slow in the third quarter, but the market was hoping for a little better from a player that had been used to outperforming in recent years. For the three months ended at the end of September, the owner of Dior, Louis Vuitton and Tiffany recorded revenues of 19.96 billion EU, up 1.1% year-on-year, with organic growth of 9%, there where the ‘Bloomberg’ consensus was counting on nearly 12%. The group’s flagship division, fashion and leather goods, achieved internal growth of 9%, slightly lower than the expectations of analysts who were counting on an increase of 11.2%. The Wines and Spirits activity was more disappointing with sales down 14% over the quarter (-2.8% expected), still impacted by a clear deterioration in cognac sales which suffered from a more difficult economic environment in the States. -United States, a normalization of post-Covid demand and a still high level of stock among resellers. LVMH did not provide numerical forecasts for the coming months but declared itself confident in its continued growth.