The Paris Stock Exchange rebounded on Monday, thanks to stronger-than-expected growth in the world’s second largest economy. the 40 closed with a gain of 0.82%, at 7,201.64 points, after giving up just over 1% last week, its first weekly decline in a month.
Chinese GDP grew 8.1% last year and 4% year on year in the fourth quarter, against 8% and 3.6% respectively expected. The market is also counting on new support measures from the country’s central bank, which would thus take the opposite view from the Fed.
However, activity was limited, with only 2.8 billion euros traded in Cac 40 stocks, due to the closure of American markets, including debt markets, for Martin Luther King Day. The stock market was therefore able to take a break with the monitoring of US bond rates, which ended Friday’s session at just over 1.79%, their level of two years ago (on January 10, they had briefly crossed the 1.8% threshold).
JPMorgan still “bullish”
Investors are positioning themselves for the fourth quarter earnings season, which should provide indications of the health of companies in the face of the prospect of interest rate hikes in the United States and inflation at its highest since 1982. A New York, technology stocks have suffered particularly from this environment, the Nasdaq Composite now showing a loss of 4.8% since the start of the year, while the S&P 500 has lost 2.2% over the period.
JPMorgan strategists find conservative the consensus of growth of 19% over one year in earnings per share of American companies in the fourth quarter and 12% in the euro zone, against around 40% in the third. “We remain very positive on the earnings outlook for 2022 and anticipate another year of significant outperformance relative to expectations, which should support our still bullish stance on equities.”, they write. The earnings season is starting slowly in France with Alstom’s third quarter accounts on Thursday. In the United States, Morgan Stanley, Goldman Sachs, Bank of America, Procter & Gamble and Netflix must return their copy for the fourth quarter in the coming days. JPMorgan Chase shares fell 6% on Friday despite record earnings. The bank has indeed warned that rising costs will weigh on its profits this year.
Renault, increase in sales of the most profitable models
In Paris, on the Cac 40, luxury companies, very exposed to China, led the rebound. Hermes and Dry appear on the podium.
Renault rose about 1.5%. While the group’s worldwide car and van sales fell by 4.5% last year, those of its sales to individuals and those of electric vehicles, the most profitable and central lever of its recovery strategy, recorded a strong progress in Europe.
Sanofi appreciated by 1.7% in the wake of the British GlaxoSmithKline, up 4% in London. The group has rejected Unilever’s £50 billion bid for its consumer healthcare arm, saying it falls short as GSK’s offer undervalues the fundamentals of its division which it was considering splitting off the year last. The consumer goods giant has been in talks with banks to raise its offer, sources cited by Bloomberg report. Unilever fell by almost 7%.
Thales ends with a gain of 1.5%. Citi, buying on the value, raised its price target from 104 to 108 euros. The broker, who qualifies the value as a “defensive refuge”, expects a cash-flow solid in 2021 and 2022.
Apart from the Cac 40, Vallourec distinguished itself on the SRD (+6.2%) The manufacturer of seamless tubes is discussing with the Brazilian authorities the reopening of its iron ore mine in Pau Branco, the operation of which was suspended following heavy rain, reports Economic value.
EDF lost another 4.6%. BofA Global Research downgraded the stock from “buy” to “underperform”. For its part, HSBC reduced its recommendation from “buy” to “hold”.
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