2023-05-08 09:03:54
Last week might have been vaguely depressing on the stock market, had it not been for Friday’s jump. Wall Street’s net rebound, for somewhat esoteric reasons at this stage except for Apple’s contribution following reassuring figures, will have avoided a fifth straight session in the red. The week starts with a public holiday in the United Kingdom for the coronation of Charles III, while most other financial centers – including Paris – are open.
On Friday, therefore, Wall Street ended four consecutive sessions of decline with a big rebound. The Nasdaq recovered 2.1% and the S&P500 1.9%. Insufficient to allow the generalist index to post a positive weekly balance sheet, but just enough for the Nasdaq to end its week at +0.1%. In Europe, the STOXX Europe 600 was down 0.3% over the same period. Objectively, if we had laid pell-mell on the table at the start of the session the various factors that allowed Wall Street to rebound, I am not sure that anyone would have been able, rationally, to predict the closing levels. . But what’s nice is that a posteriori, we can explain everything. Friday’s rebound? It’s easy, these are the good results of Apple, reinforced by employment figures still strong in the United States and the rebound of regional banks. If it had gone down, I might have explained to you that the good results of Apple were swept away by the good employment figures, which rekindled fears for the trajectory of American monetary policy, which caused the regional banks to plunge .
We therefore remain in a configuration where the equity markets interpret the sequences offered to them in their own way, in a context of mediocre visibility on the macroeconomics. However, the message that gained weight last week is that of a Fed that will have to, year following year, stop its cycle of monetary tightening or even start to lower rates. You remember, the Holy Grail of financial investors is lower interest rates. As Mamie Lucette says more trivially, “for my stock market investments, it is better to have a flourishing silver market and a struggling economy than the opposite“.
As for trying to understand why the American bank Pacwest fell -68% in four sessions and then +82% on Friday… I gave up. US monetary policy futures signal that the rate hike period is over following the last tightening in early May. The debate now shifts to the date of the first drop. July held the line last week, but the favor of forecasts seems to have since shifted to September. The US central bank, for its part, is trying to make people believe that it has no plans to lower rates this year, to prevent activity from accelerating once more by causing inflation to rebound. The strategy of this lying poker is likely to evolve according to new input data. Here are a few :
Short-term US macroeconomic statistics
- The opinion survey of loan officers, known as the SLOOS survey (for Senior Loan Officer Opinion Survey), which the Fed is to publish today and which measures the state of tension in the credit market following the rate hikes. Usually nobody gives a damn, but this quarterly survey has once once more become important in trying to predict the damage of high interest rates on the economy.
- April inflation, published on Wednesday, and producer prices (Thursday).
- The University of Michigan Consumer Confidence Index (Friday).
The X factors
May soundtrack
The answer to Friday’s question for those following:Soitec and Steico.
Among other current market news, Berkshire Hathaway, Warren Buffett’s holding company, published its results and produced the usual comments on its portfolio and market trends. The group sold many more listed equity securities than it acquired in the first three months of the year. He is sitting on a war chest of more than $130 billion, the capitalization of the second largest German company, Siemens AG. Buffett, who had dubbed Greg Abel as his successor in 2021, confirmed his choice. It must be said that at 92, the billionaire-guru (not to be confused with the Kant-guru, who is a philosopher) must prepare his succession, just to limit as much as possible the turmoil that seems inevitable to his disappearance.
In Asia Pacific, the Japanese Nikkei 225 is experiencing a difficult “golden week” comeback. After three holiday sessions, the recovery is at -0.6%. China is doing better in the wake of Wall Street, with gains of around 0.8% in Shanghai and Hong Kong. Similar increases are visible in South Korea, India and Australia. European leading indicators are hesitating around balance.
The CAC40 lost 0.16% to 7421 points at the start of the session.
Economic highlights of the day
German industrial production (8:00 a.m.) and its US wholesaler inventories (4:00 p.m.) are in view. The whole agenda here.
The euro is firm at 1.1043 USD. The ounce of gold came back around 2023 USD. Oil rebounded, with North Sea Brent at $75.64 a barrel and US WTI light crude at $71.72. The performance of the american debt over 10 years reached 3.42%. Bitcoin is trading around 28,300 USD.
The main changes in recommendations
- Adidas: Jefferies remains to be kept with a price target raised from 150 to 175 EUR.
- AP Moller Maersk: Kepler Cheuvreux goes from holding to buying, aiming for 13,400 DKK.
- Befesa: Goldman Sachs remains long with a price target reduced from 57 to 54.50 EUR.
- Hemnet: Jefferies remains to be kept with a price target raised from 150 to 155 SEK.
- Landis+Gyr: Credit Suisse remains neutral with a price target raised from 62 to 68 CHF.
- Nestlé: Julius Bär remains on the buy side with a price target raised from 125 to 130 CHF.
- Nexans: Credit Suisse starts tracking at neutral targeting EUR 100.
- Ocado: Jefferies remains to be kept with a price target raised from 485 to 550 GBp.
- OCI: Jefferies remains to be kept with a price target reduced from 30 to 26 EUR.
- Raiffeisen: Citigroup goes from sell to neutral, targeting EUR 15.
- Rational AG: Baader Helvea goes from accumulating to reducing, aiming for EUR 635.
- Rieter: UBS remains neutral with a price target reduced from 104 to 98 CHF.
- Schibsted: Jefferies remains long with a price target raised from 272 to 280 NOK.
In France
Important (and less important) announcements
- Vivendi obtains Spain’s approval to increase its stake in Prisa.
- Alstom has appointed Bernard Delpit as the new Group Executive Vice President and Chief Financial Officer effective June 30.
- S&P raised Verallia’s long-term issuer credit rating from “BB+” to “BBB-“, with a positive outlook. This increase marks the passage of the debt from the speculative category to the investment category.
- Vallourec announces the return to full operation of the Pau Branco mine.
- ABB announces its collaboration with Lhyfe and Skyborn on the SoutH2Port project.
- John Textor becomes CEO of Olympique Lyonnais Groupe. Jean-Michel Aulas honorary president.
- They have published / They must publish : Buy-Rent…
In the world
Company results (comments are given on the spot and do not prejudge the evolution of securities)
- Almirall: Core profit reached €51.8m in Q1, slightly above expectations.
- Berkshire Hathaway: quarterly operating profit exceeds $8 billion.
- PostNL: operating profit finally slightly positive in Q1, at €7m.
Important (and less important) announcements
- ISS recommends shareholders vote once morest Shell’s climate activists’ resolution.
- HSBC shareholders block Ping An’s Asian split proposal and dividend policy change.
- Assa Abloy is going to sell several brands to secure the American antitrust green light in connection with the takeover of Spectrum Brands for $4.3 billion.
- Coty is considering a double listing in Paris (Adrien Chavanne just made a presentation of Coty last week here. Does he have inside information?.
- Buffett says Apple is the best company in Berkshire’s portfolio.
- US justice is investigating possible violations of Russian sanctions by Binance.
- Pinduoduo denies the transfer of its head office to Ireland.
- US justice is investigating insider trading by First Republic executives.
- Pacwest soars 82% on Wall Street.
- The main publications of the day: PayPal, Westpac, McKesson, KKR, Hoya, Marubeni, BioNtech… The whole agenda here.
Lectures
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