Yesterday, the stock market session in the United States was again marked by a new big gap between the Dow Jones (+0.15%) and the Nasdaq 100 (-2.2%). The tech index lost 29.8% from the records set in mid-November 2021. The Dow is down 11% from its more recent peak (January 2022). -11% “only” if I may say so. I refer you to the previous day’s column for an explanation of this performance lag. I take this opportunity to answer a question I was recently asked about the difference between the Nasdaq 100 and the Nasdaq Composite, both of which are used by the media. The first is the top of the second basket, which is much larger as it contains over 2,000 companies. I won’t offend you by telling you how many values the Nasdaq 100 has. The Nasdaq Composite lost 2.35% yesterday, slightly more than the others because it includes both smaller values and/or more brittle ones. From the peak in November, it is -30.5%. So the performance or lag in this case is very close, because it is the very large capitalizations shared by the two indices that make it rain or shine.
Tobacco was hit yesterday by particularly pessimistic comments from Snap’s management following the announcement of mediocre results. Snapchat’s parent company has made it clear that social media ad revenue is going through hard times. Race results, -43% at title close. This looks very high, but this percentage also includes an adjustment for the irrational exuberance of some past estimates. Investors had no trouble convincing themselves that they were paying the right price when the earnings trajectory pointed to infinity. Since the slopes are less marked, it is a matter of life and death. Snap, which is a dwarf compared to many of the other Californian companies that chain us to our smartphones, has ousted its illustrious competitors. Alphabet (Google) lost 5%, Meta (Facebook) lost 7.6% and Amazon lost 3.2%. Smaller peers such as Pinterest (-23%) were also affected. I read that about $200 billion of capitalization evaporated yesterday from social networks, which is like destroying Novartis to get a completely absurd picture.
In Europe, the indices have clearly corrected by the close, carried away by the entire rating. Well, not all because bank stocks surged after JPMorgan Chase raised its forecasts, reminding everyone that the sector benefits from higher rates, which attracts savings. The health sector has also performed well, as its protective qualities are now valued. In this context, it’s not surprising that the Swiss SMI is the only European index that rose 0.15% in yesterday’s session, proof that Novartis was not destroyed. The flagship index of the Zurich Stock Exchange includes 42% of the shares of medical companies (Roche, Novartis, Lonza, etc.), 18% of financial companies (Zurich Insurance, UBS, etc.) and 18% of basic consumer goods (Nestlé). in a session similar to the day before.
Today we will have to keep an eye on US durable goods orders (2:30 pm) and the minutes of the last Fed meeting (20:00, therefore outside the European session). Yesterday, two statistics published there turned out to be lower than expected: the Richmond Fed’s activity index disappointed, and data on new housing starts to bear traces of a rate hike. The feeling that emerges from all of this is that the US economy is starting to feel uneasy about the current turmoil, but also that overheating is starting to subside. Financiers reflected this by lowering their expectations of what rates will be in a few months, which explains the fall in US government bond yields. I’m afraid to be a little abstruse, but to simplify, this is more of a positive signal for the market: in principle, the Fed may not have to be as aggressive as expected in the long term.
Among other events of the day, I also noted the annual general meeting of TotalEnergies. What happened to Shell yesterday was, to put it mildly, the least crowded with activists who themselves volunteered to debate to press the company to speed up its energy transition. The meeting was adjourned for two hours. For its part, the French group refused to put on the agenda a resolution of several shareholders, including institutional investors, asking that compliance with the Paris Agreement be included in the strategy. The debate can be heated. TotalEnergies announced this morning that it has acquired a fifth U.S. renewable energy producer, Clearway. Coincidence? I do not believe.
European stock markets will open higher this morning. The so-called “technical” rebound after falling the day before. In the Asia-Pacific region, early trade growth has faded, but mainland China, Hong Kong and Australia are still growing. CAC40 gained 0.8% to open at 6303 points.
Economic events of the day
In the US, orders for durable goods (14:30) and minutes of the last Fed meeting (20:00) will cause the greatest interest. The entire macro diary is here.
Euro continues its ascent to 1.0714 dollars. An ounce of gold rose slightly to 1862 US dollars. Oil remains very close to its recent levels, with North Sea Brent at $114.82 a barrel and US WTI light crude at $111. The yield on 10-year US debt fell by 2.76%. Bitcoin is trading around $30,100.
Major changes in recommendations
- ACS, Actividades de Construccion y Servicios: Goldman Sachs moves from buy to neutral.
- Banco Santander: Jefferies remains long, target price raised from €4 to €4.30.
- BBVA: Jefferies remains long with a reduced target price of €7.40 to €7.10.
- Bankinter: Jefferies remains in effect, target price raised from €5.50 to €6.
- CaixaBank: Jeffreys remains in place, target price raised from 3.50 to 3.65 euros.
- Compagnie Financière Richemont: Julius Bär remains long, target price reduced from CHF 155 to CHF 115.
- Credito Emiliano: Jefferies shares went from underperforming to holding on to €5.90.
- CTS Eventim: Exane BNP Paribas resumes monitoring of poor results with a €50 target.
- EQT: Barclays is starting to track overweight, targeting 315 SEK.
- Euroapi: Societe Generale starts tracking purchases, targeting 15.50 euros.
- Getlink: Goldman Sachs moves from buy to neutral targeting 19 euros.
- Hikma: JP Morgan is moving from overweight to neutral, aiming for 1900 GBp.
- Homeserve: Jefferies shares stand, target price raised from £830 to £1,200.
- HSBC: AlphaValue still needs to be lowered and target increased from 462 GBp to 511 GBp.
- Intesa Sanpaolo: Jefferies remains in place, target price reduced from €2.35 to €2.25.
- Legrand: Jefferies remains long, target price reduced from €104 to €92.
- Munich Re: Jefferies remains long with a target price raised from €300 to €305.
- Partners Group: Barclays launches weighted online tracking with CHF 1,040 target.
- Philips: JP Morgan turns from neutral to negative, targeting 21.30 euros.
- Unicredit: Jefferies still buying, target price increased from €15 to €16.
Important (and less important) announcements
- TotalEnergies takes 50% Clearway at 5and player in the field of renewable energy in the United States. The transaction is conducted in cash and shares of SunPower at $35.10 per share of Clearway Energy (a subsidiary of Cleanway) and $18 per share of SunPower.
- Stellantis and Samsung SDI confirm construction of a $2.5 billion joint battery manufacturing plant in Indiana.
- Saint-Gobain will acquire building materials companies Fibroplac and Falper, both based in Portugal.
- S&P puts Electricité de France in France on a “negative” list due to nuclear issues and mounting debt.
- Sodexo has finally given up on bringing in an outside investor for its Welfare and Rewards subsidiary, which will remain a key asset in the coming years under the project.
- NGOs accuse KLM (Air France-KLM) of “green laundering” and threaten to sue.
- Clapierre appoints Jean-Marc Gestin as chairman.
- Technip Energies and Samsung Engineering enter into an engineering contract with Texas LNG in the US and form a joint venture.
- Valneva successfully completes chikungunya vaccine candidate trials.
- Compagnie Plastic Omnium places Schuldschein in the amount of 400 million euros.
- Neoen has won 80 MW of solar projects in Ireland.
- Bonduelle is in talks to sell 65% of its Americas Long Life division to FTQ and CDPQ for a value of €625 million.
- Séché will acquire some industrial water treatment plants in France from Veolia.
- Prodways will supply six additional 3D printers and related supplies to a major industrial customer.
- Hydrogène de France and Pestech are collaborating on the production of green hydrogen from hydroelectric power plants in Cambodia and Malaysia.
- Archos is denied a dilutive financial contract signed with Yorkville.
- Compagnie des Alpes, Manutan, Qwamplify, LDC, Osmozis and Entech have published their reports.
In the world
Important (and less important) announcements