2023-10-13 15:42:38
Published on Oct. 13, 2023 at 5:42 p.m. Updated on Oct. 13, 2023 at 6:07 p.m.
Should we see this as a bad omen? The quarterly corporate results season has only just begun and the “profit warnings” are already raining down. Euroapi, Alstom, Maisons du Monde, SMCP, Ekinops, Sartorius Stedim… All sectors and all companies, regardless of their size, are concerned. And the list could grow in the days to come. This Friday, the biotechnology equipment manufacturer, which had already launched an alert in June, once again reduced its annual forecasts, now aiming for a decline ” by almost 19% » of its turnover. The margin objective is also lowered while those for 2025 will be revised in January. This caused Sartorius Stedim shares to fall 16.74%, to 187.25 euros, at the close, after a session low since April 2020 at 183 euros.
The announcement stunned the market, which also had to deal with a greater than expected deterioration in American consumer confidence in October, the rise in inflation expectations in the United States and the surge in black gold prices. , under the dual effect of the strengthening of American sanctions on Russian crude exports and the war between Hamas and Israel.
At the close, the Cac 40 dropped 1.42%, to 7,003.53 points, in a business volume of 3.3 billion euros. Over five days, the Parisian index fell by 0.8%, marking its fourth consecutive week of decline, a sequence that it had not experienced since January-February 2022.
War between Israel and Hamas shakes oil and bond markets
On the oil front, Brent from the North Sea climbed almost 4%, to $89.60 per barrel, for WTI at $86.60, up 3.5%. On Friday morning, the Israeli army ordered “ the evacuation of all civilians in Gaza City from their homes to the south for their own safety and protection “. The rise of geopolitical risk in the Middle East is shaking up the oil market, at the same time as it is shaking up the interest rate market. And reduces yields. The American Treasuries rate thus fell to 4.61%, compared to 4.73% at the close on Thursday, while, on the Old Continent, the German Bund of the same maturity fell by 7 basis points, to 2. 72%. “ Bonds are recovering,which pushes yields lower as traders likely want to hedge against geopolitical risk heading into the weekend », Explains Christophe Barraud, chief economist at Market Securities, quoted by Bloomberg. Gold, the safe haven asset par excellence, is trending upwards at $1,934.8 per ounce.
The surge in energy prices is bringing back fears about inflation – one-year expectations are at their highest in five months in the United States – and, in turn, about the trajectory of interest rates, subject sensitive, if necessary, for the financial markets. In September, the consumer price index in the United States was up 3.7% year-on-year and 4.1% again, that is to say excluding volatile elements, such as food or energy. “ In the medium term, inflation will stabilize between 2.5% and 3%, due to the lack of labor, which is pushing up wages, deglobalization and the cost of the ecological transition. », Estimates Alexis Renault, head of high yield management at Oddo AM.
Fed status quo?
In the short term, what decision will the American Federal Reserve take on November 1st? Will the recent surge in sovereign rates, with the yield on Treasuries at a level not seen in 16 years, encourage a the state in which, considering that financial conditions have tightened on their own? Or will the surge in black gold prices force it to take a new turn of the monetary screw? The exercise is difficult. For traders, a the state in which in November and December – i.e. a Fed funds range maintained between 5.25% and 5.5% – remains the central scenario. “ It is unlikely that thelatest series of data on inflation and employment changes the Fed’s mind for the November meeting. She is expected to stand by and watch what happens.However, the first rate cut will not come so soon, and the Fed will try to capitalize on the policy ‘higher for longer’ to avoid having an accident on what she calls the last mile. The Fed is expected to cut rates in July next year. Forecast was for June ahead of Thursday consumer pricesi,” comments Ipek Ozkardeskaya at Swissquote Bank.
Jamie Dimon sounds the alarm
Among the elements that the Fed must weigh is also the quality of company results. As usual, the major American banks Wells Fargo, Citigroup and JPMorgan, as well as BlackRock opened the ball this Friday. With the exception of the asset manager, whose stock lost 0.9% on Wall Street, the three banks are up, from 3% to 4%. JPMorgan published better-than-expected third-quarter results and raised its annual forecasts thanks to record net interest income. Wells Fargo and Citigroup also benefited from the increase in interest income, but, for the future, the discourse is very cautious. “ This period could be the most dangerous the world has seen in decades », Alerted Jamie Dimon, the boss of JPMorgan, who also refers to the conflicts in Ukraine and the Middle East. For its part, BlackRock generated income slightly lower than expectations. But, above all, incoming cash flows are in free fall, because of the returns offered by money market funds.
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