The air of nothing, the Nasdaq has just investigated five declines in six sessions. Which does not call into question the love story between investors and equities, but which illustrates the fears at the approach, this followingnoon, of the US inflation figures for March, so important for the conduct of the monetary policy and therefore for risk-taking on the markets. I address this point this morning, not without having previously mentioned the Parisian records.
Because the stock markets do not all seem to tell the same story regarding this first half of April. Take the French CAC40: it reached in session the precise figure of 7403.67 points. This is its new record, even if it was not held at the close, despite an increase of 0.9% which led the main Parisian index to 7390 points. Fine connoisseurs of the rating will reply to béotiens that the Parisian place has already been stealing from record to record for several weeks, since the CAC40 dividends reinvested (PX1GR) has been breaking records since the beginning of February. It also peaked yesterday at 21,782 points. To give you an idea of the importance of taking dividends into account in the index, the classic CAC40 gained 97.1% over 10 years while the CAC40 with dividends reinvested served 168.5%.
In the United States, what is striking in April are the five declines over six sessions of the Nasdaq 100. The American technology index, which is an excellent barometer of investors’ libido, is coming out of a quarter of net rebound following its year 2022 calamitous. To be honest, it should be noted that three of the five contractions were minimal, so that it is rather necessary to speak of a stabilization or a “lateralization” of the courses. Yesterday, the Nasdaq 100 lost 0.7% without ever having moved into the green during the session. Unlike the S&P500, which progressed for a good part of the day before posting a slope worthy of a great alpine north face in the last half hour, to the point of finishing at zero.
What can we conclude from all this? That American investors consider that this April 12 is a form of ax session since it hosts the publication of American inflation for the month of March. The market view is somewhat binary: either inflation confirms its slowdown, or it is stronger than expected. The best-case scenario for equities is the first, because it would validate the prevailing sentiment that the Fed might stop raising rates, or let’s be crazy start lowering them in the near future, to avoid a recession. But if inflation picks up, the cost of money is likely to be more permanently high, which will fuel economic pessimism and weigh on companies that need to fuel their growth with new money. In other words, cyclical and growth stocks, precisely those that have been alternating market leadership for the past few weeks, are likely to suffer. Concretely, economists expect on average a slowdown in annual inflation from 6% in February to 5.1% in March, and a rise in prices limited to 0.2% between February and March. Core inflation, which excludes the most volatile elements, is expected to rise monthly by 0.4%, following 0.5% in February. The key word of expectations is therefore reduction of overheating. Nothing is going well, the chips are down: response at 2:30 p.m.
There will be quite a few other announcements of a macroeconomic nature, but none, a priori, that will come close to US inflation. I still quote a speech by Andrew Bailey, the head of the Bank of England around 3:00 p.m., before a monetary policy decision by the Bank of Canada at 4:00 p.m. We will however have to keep an eye in the evening (8:00 p.m.) on the publication of the minutes of the last meeting of the Fed (in this case the decision of March 22), in particular because it should contain elements on what the central bankers of the banking crisis thought at the time, that is, three days following the disaster rescue of Credit Suisse by UBS. To complete the picture, I must also mention that the IMF published a report yesterday which does not add much to the debate: there are still risks for the world economy and the turmoil in the banking world n don’t help matters. We kinda suspected that.
On the corporate agenda, LVMH will publish its first quarter performance tonight. The Frenchman is the barometer of the luxury sector, so important for the stock market performance of the CAC40.
In markets that are near the end of their run or already closed this morning, the Japanese Nikkei 225 closed with a gain of 0.6% and the Australian ASX up 0.4%. The drop in the Nasdaq once once more weighed on the Hang Seng, which lost 0.9% in Hong Kong in session, but much less on the Korean Kospi, which gained 0.1%. India and Mainland China are moving around balance. European leading indicators are, like Bombay and Shanghai, undecided in pre-opening. The CAC40 joined the 7400 points at the opening, up 0.1%.
Economic highlights of the day
Two important lines for monetary policy today in the United States: the first estimate of March inflation (2:30 p.m.) and the content of the discussions of the last Fed monetary policy committee (8:00 p.m.). The whole agenda here. This morning, Japanese machinery orders contracted less sharply than expected in March (-4.5% vs -6.4% expected).
The euro rises to 1.0923 USD. The ounce of gold rebounds to 2017 USD. Oil is accelerating with North Sea Brent at $85.60 a barrel and US Light Crude WTI at $81.44. The performance of the american debt over 10 years evolves to 3.43%. Bitcoin is trading around USD 30,000.
The main changes in recommendations
- Aker BP: Jefferies goes from holding to buying, aiming for NOK 315.
- Cancom: Jefferies remains long with a price target reduced from 44 to 41 EUR.
- Carrefour: Barclays raises its target price from 20 to 22 EUR.
- Energean: Jefferies switches from buy to hold targeting 1460 GBp.
- Enquest: Jefferies switches from buy to hold aiming for 20 GBp.
- Equinor: AlphaValue shifts from lightening to accumulating aiming for NOK 393.
- Faurecia: Barclays raises its target price from 15 to 18 EUR.
- Givaudan: Berenberg remains long with a price target reduced from 3500 to 3400 CHF.
- Grifols: Morgan Stanley moves from online weight to overweight by targeting EUR 14.
- Klingelnberg: Credit Suisse remains outperforming with a price target raised from 25 to 28 CHF.
- L’Oréal: Deutsche Bank goes from buying to keeping, targeting EUR 410.
- Neoen: Berenberg remains to be kept with a price target reduced from 40 to 33 EUR.
- Ocado: Goldman Sachs starts tracking at neutral, targeting 600 GBp.
- Outokumpu: SEB Equities went from holding to buying, targeting EUR 5.70.
- Royal Unibrew: Jefferies remains to be kept with a price target raised from 600 to 640 DKK.
- Scor: RBC reduces its target price from 32 to 29 EUR.
- Soitec: Credit Suisse remains outperforming with a price target raised from EUR 219 to EUR 245.
- Thule: Handelsbanken goes from selling to keeping.
- Tullow Oil: Jefferies goes from holding to underperforming by targeting 25 GBp.
- Var Energi: Jefferies remains long with a target price reduced from 43 to 34 NOK.
In France
Important (and less important) announcements
- Danone is expanding into specialized nutrition in Poland with the acquisition of Promedica.
- Carrefour’s Brazilian subsidiary has signed an agreement to reduce the price of the acquisition of Grupo Big by up to BRL 1 billion (around $200 million) once morest the acceleration of payment, which will reduce the bill by around 14% according to AlphaValue .
- Scor specifies its 2023 objectives.
- March volatility inflates Euronext trading.
- Hyundai entrusts Gaztransport & Technigaz with the design of the tanks of two new LNG carriers
- Société Foncière Lyonnaise sells the building at 6 rue de Hanover in Paris to Générale Continentale Investissements (GCI) and Eternam.
- Kaufman sells off-plan to Pestana, a hotel within the Austerlitz A7/A8 project.
- Peugeot Invest is strengthening its extra-financial skills teams.
- AlphaValue informs me that Solocal announced last week that two members of the board of directors have resigned “without circulating the information through its usual channels”, which does not bode well following the postponement of publication of accounts.
- Cellectis welcomes its first patient in Europe treated with UCART22.
- DBT deploys 32 ultra-fast charging stations in Hauts de France.
- Charwood unveils orders.
- Metadvertise has already raised €3 million with its 14% bond placement.
- Predilife signs an agreement with Colas Rail.
- Groupe Berkem launches the marketing of Termifuge K, an anti-termite and water-repellent solution.
- The small corner of dilution: Pharmasimple takes stock of its liquidity.
- They have published / They must publish: Ecomiam, Ober, Micropole, Patrimoine et Commerce, Ecoslops, Foncière Inea, Hydrogène de France, SA Metalliance, Société Fermière du Casino Municipal de Cannes…
In the world
Company results (comments are given on the spot and do not prejudge the evolution of securities)
- AB Volvo: T1 sales are higher than expected.
Important (and less important) announcements
- The rescue plan for Credit Suisse by UBS is approved by the Upper House of the Swiss Parliament, but rejected by the lower house, which will have no consequences on the operation.
- Boeing’s quarterly orders top those of Airbus for the first time since Q2 2018.
- Emerson Electric nears acquisition of National Instruments.
- Petrofac predicts a bigger loss for 2022 following reviewing its portfolio.
- Microsoft is facing a new legal challenge following a group of video game players filed an amended lawsuit once morest Activision Blizzard’s takeover bid.
- Veritas and Carlyle have reportedly ended talks regarding the sale of Cotiviti’s shares, according to Bloomberg.
- Carnival is on track to pay off its $32.7 billion debt, according to its chief financial officer.
- Zalando is proposing to appoint Vice President Kelly Bennett as the next Supervisory Board Chair.
- Moderna wins favorable court ruling once morest Arbutus Biopharma’s patent on lipid nanoparticle technology.
- Tilray will buy Hexo for regarding $56 million in stock.
- The main publications of the day: LVMH, U-Blox… The whole agenda here.
Lectures
