The summer sales don’t officially start until tomorrow, Wednesday June 22, in France, but investors are already hunting for bargains. After a gain of 0.64% on Monday, the Bedroom 40 gained another 0.75% on Tuesday, to 5,964.66 points, just missing the march of 6,000 points. The volume of business was limited to 2.8 billion euros despite the reopening of Wall Street, closed Monday for Juneteenth. The major indices are also on the rise, which has supported the Cac 40.
Waiting for Jerome Powell’s audition
Nevertheless, the rebound of the Parisian barometer is nothing compared to the 10.2% drop suffered between June 6 and 17. For some strategists, it would only be a “bear market rally”, while the Cac 40 went into a bear market on Thursday evening after a 20% drop from its January 5 peak.
If investors tend to be very cautious, it is due to inflation, the turn taken by the major central banks to stem the spiral of rising prices and a fear of recession. Monetary policy is on everyone’s mind again this week as Federal Reserve (Fed) Chairman Jerome Powell is due to take questions from members of Congress, first the Senate on Wednesday, then the House of Representatives. , Thursday. The market will be watching for indications of the pace of the rise in interest rates. Fed-funds which are established, after last week’s increase, in a new range ranging from 1.50% to 1.75%. Questions should also focus on the neutral rate and the risk of recession in the US economy.
” The Fed is tightening its policy at an accelerated pace in order to combat the inflation shock. Under these conditions, the scenario of soft-landing [atterrissage en douceur] seems more and more difficult to achieve “, estimated the analysts of the cabinet Oddo BHF in their weekly note published Monday. Hardly optimistic, their colleagues at Goldman Sachs now estimate the probability of a recession in the United States in 2023 at 30%, against 15% previously. Berenberg’s strategists, for their part, retain as their basic hypothesis the prospect of a ” temporary recession in the United States, the euro zone and the United Kingdom in 2023.
What could restore appetite for European equities? Laurent Denize, global CIO of Oddo BHF AM, tried to answer this thorny question. According to him, three main catalysts are needed: A noticeable drop in inflation leading to less restrictive central bank policy […] A reacceleration of the Chinese economy caused by a reopening and a pronounced fiscal stimulus. European earnings are indeed highly exposed to Chinese growth, both directly through revenues generated in China and indirectly through the supply chain. As such, the gradual reopening of Shanghai is good news and recent infrastructure spending should help support the Chinese economy and therefore the consumption of European products. [Enfin] maintenance of corporate margins thwarting the darkest forecasts. »
Eramet, a new life without Aubert & Duval
On the values front, Saint Gobain recovered after its 4% drop on Monday, linked to the warning of the Irish Kingspan on the deterioration of its market. The title of the habitat specialist regained 2.48%. He is preceded oar Liquid air (+3.05%). The industrial gases giant has just signed a new supply partnership with Sweden’s Vattenfall in the Netherlands for offshore wind capacity under construction of around 115 MW. This 15-year contract will start in 2025.
Apart from the flagship index, the mining group Eramet (+7.43%) is preparing to sell its subsidiary Aubert & Duval, which specializes in high-performance alloys, to a French consortium made up of Airbus, Safran and Tikehau Ace Capital. The operation, which will be based on an enterprise value of 95 million euros, will enable Eramet to refocus on mining and metallurgical activities, by surfing on demand linked to the energy transition.
For its part, the Strategic Participation Fund (FSP) entered the capital of the producer of components for the electronics industry Soitec (+3.86%), taking a stake of approximately 150 million euros.
Finally, Valneva still won 17.10%, after a jump of 29.3% on Monday. The market continues to welcome the 8.1% stake in the American laboratory Pfizer. The director general of biotech Franck Grimaud also declared on BFM Business that his vaccine against Lyme disease had the potential to become a “blockbuster” with more than 1 billion euros in sales.