(BFM Bourse) – The main tricolor index, which managed to regain 1.7% last week, has started this index in the red while results season will begin in the coming days. As many uncertainties persist about the economic outlook, investors will be more attentive than ever to corporate rhetoric.
The implementation of new distancing measures and travel restrictions in China in the face of the emergence of the BA.5 version of the Omicron variant set the tone for Europe’s first stock exchange on Monday morning. Following in the footsteps of the Shanghai Composite (-1.5%), the CAC 40 lost over 2% at the open, but the Paris market pared its losses during the morning. At around 12:00 noon, the index settled at 5,991.03 points, down 0.7% since the last close.
Last week, the CAC 40 managed to rise by 1.72% and the S&P 500 by 1.92% – a seasonal improvement which means the first half of July was particularly buoyant for stocks.
“As stocks drop, global credit and yields widen [des obligations NDLR, ce rendement augmentant à mesure que le prix baisse] Rising in the first half, it was only a matter of time before conditions tightened enough to slow growth to the point needed to offset inflation. Unsurprisingly, almost all market watchers are now predicting a recession and a decline in corporate profits. However, investors are questioning how much of the inflation, tightening and slowdown is already priced in and whether that’s enough, said Robert Surgent, senior fund manager at Neuberger Berman. For the first time since the beginning of the year, the specialist thinks this could be okay, however “if caution is required over the next quarter, we don’t think it’s wise to be more in relation to the markets than it was six months ago,” notes Robert Surgent.
It is clear that the content of the speech of business leaders towards their goals for 2022 will be decisive in checking whether the price decline in the first half of the year adequately reflects the difficulties associated with inflation, or, conversely, earnings contraction requires an additional downward adjustment. This week will begin releases at the end of the first semester. The first US batch is expected to launch with PepsiCo on Tuesday or Delta Airlines on Wednesday, followed by JPMorgan and Morgan Stanley on Thursday and then BlackRock, Citigroup and Wells Fargo on Friday. In the macroeconomic chapter, the release of the first inflation data for June in the US, on Wednesday, is the main event of the week.
At the moment, the animation is somewhat unavailable in the Parisian market in limited volumes, as was already the case on Friday. STMicroelectronics earned 0.8% at midday when the group announced with great fanfare a project to build a new plant, jointly with US group GlobalFoundries, on its Crolles website.
With +0.25%, Sanofi is also one of the few representatives of CAC 40 in green after a successful clinical study on Phytocyran, an antihemophilic molecule obtained from nylam in 2018.
Among the smaller caps, Hoffmann Green Cement stands out with the acquisition of Périgord Group ABC Broyage, which allows it to absorb the processing of its raw materials. This first acquisition by the company was well received by investors, with Hoffmann Green Cement gaining a 2.4% stake.
In the foreign exchange market, the euro is heading back towards the more than twenty-year floor it touched last week under $1.01, at $1.0108 (-0.79%). Oil prices corrected again significantly to $104.90 (-1.98%) per barrel for Brent and $102.31 (-2.35%) for WTI.
Guillaume Beyer – © 2022 BFM Bourse