Wall Street has also risen to prominence thanks to the pull of its heavyweights. Two converging phenomena allowed US indices to recover between 1.5 and 2%. First, the “chef’s surprise”, an increase in JPMorgan Chase forecasts during the investor’s day. US First Bank explained that it would benefit from higher-than-expected net interest income while maintaining a very solid return on equity. As a result, shares rose by 6.2%, pulling the entire banking sector, especially Goldman Sachs, the second largest weight in the Dow Jones index. Let me remind you that the oldest American index works on an outdated principle, which consists in taking into account the price of a share, and not its market capitalization. Thus, Goldman Sachs, which is listed at $316 with a capitalization of $100 billion, weighs 2.2 times more than Apple, and Apple’s brand capitalization is $2.226 billion, or 22 times more. That’s because Apple shares are only worth $143. At the close of the Dow Jones added almost 2%.
Tech stocks, Apple definitely (+4%) did not stand aside. Together with Microsoft (+2.3%), they allowed the Nasdaq 100 to rise by 1.68%. Thus, the technology index has advanced less than the old Dow Jones. This is mainly because investors are still avoiding some stocks that are considered too risky: why buy Roku when you can buy Apple for less than 25x profit? After the close of trading in the United States, major markets are teetering between the poor results of Snap (whose title is down 31% off-session) and the good results of Zoom Video Communications (+4%).
A curious hitch between banks and big tech has taken the edge off tensions over Joe Biden’s claims of US military support for Taiwan if China goes on the offensive. The American media is not shy about talking about the oversight of their president. The White House later backtracked, pointing out that Biden was talking about Ukraine-style support. It is Beijing that should be entertained by the western meanders.
It’s easy to say finally have fun because the Chinese Communist Party is facing an economic situation complicated by the restrictions imposed under the zero covid policy. To respond to this, a number of measures were announced last night, including tax credits, payment mechanisms for prudent entities, and investment plans. Investors continue to wonder why Beijing is content with successive small announcements instead of a nice big stimulus package, but they are fine with little at the moment. No matter what, we remain in the absolute and constant paradox of financiers who cry out for less regulation but ask for government bailouts as soon as the situation falters a little.
In the afternoon session, we’ll have to keep an eye on the PMIs of the major economies to see if and to what extent inflation and the alarming economic news abounding in our media are affecting the morale of corporate purchasing managers. Statistical data released at 16:00 in the US on new real estate will show whether the tightening of monetary policy that began in the US has an impact on this market. In the evening, Fed chief Jerome Powell and ECB chief Christine Lagarde are scheduled to give speeches at separate events. If we now more or less know what the US central bank has in mind, the spotlight may turn to Lagarde and to the decisive choices to be made in Europe in the coming weeks regarding rates and asset buyback program cuts. . Due to the recent spread of small peaks in the European monetary landernau, we feel that positions in the institution are diverging, which does not really help to improve the transparency of decisions.
Mood in the morning, forgive me for this trivial description – Snap vs. China. The American tech company issued a very poor outlook after the close, sending shares down 30% and putting pressure on US leading indicators. On the contrary, and I spoke about this a little earlier, investors are favorable to the support measures announced by Beijing. In a normal world, these two pieces of information should not carry the same weight. But in today’s stock markets, it may be, at least not for long. As a result, stock markets in the Asia-Pacific region are lower this morning. The CAC40 lost 1.17% to 6284 points shortly after the open.
Economic events of the day
Return of PMIs, which measure purchasing managers’ optimism, for the May batch of major economies. In the US, the Richmond Fed index and data on new housing will also be published (16:00). Jerome Powell and Christine Lagarde are scheduled to give speeches at two separate events, but that will take place after Europe closes. The entire macro diary is here.
Euro continues its ascent to 1.0673 dollars. An ounce of gold stabilizes around $1,854. Oil remains solid, with North Sea Brent at $112.72 a barrel and light WTI at $109.70. The yield on 10-year US debt remained virtually unchanged at 2.83%. Bitcoin is trading around $29,250.
Major changes in recommendations
- ABN Amro: Berenberg remains short from 10 euros to 9.50 euros.
- Commerzbank: Societe Generale is moving from holding to buying, aiming for 9 euros.
- Compagnie Financière Richemont: Jefferies remains long, target price reduced from CHF140 to CHF125. Bank of America remains long with a reduced target price of CHF175 to CHF170.
- Datweiler: Credit Suisse has moved from superiority to neutrality, targeting 249 Swiss francs.
- Deutsche EuroShop: HSBC moves from buy to hold with a target of €22.50.
- Fortum: Berenberg remains in charge, target price reduced from 30 to 21.50 euros.
- Glencore: Julius Bär remains in place, target price raised from 480 GBp to 500 GBp.
- Hellenic Petroleum: AlphaValue moves from decline to accumulation, targeting 8.32 euros.
- Idorsia: Citigroup remains on the buying side with an increase in target price from 25 to 33 Swiss francs.
- Kingfisher: Societe Generale moves from sale to holding, aiming for 271 GBp.
- Moonpig: Jefferies remains long with a target price raised from 410 GBp to 430 GBp.
- Mowi: Berenberg remains in place, target price increased from NOK 235 to NOK 245.
- Prosus: Barclays is moving from overweight to weighted online, targeting €54.90.
- Valuation: Jeffreys remains in place, target price reduced from €28.50 to €26.50.
- SFS: UBS is moving from buy to hold, aiming for CHF115.
- Uniper: Berenberg remains in place, target price reduced from 32 to 24 euros.
- Vesuvius: Berenberg remains long, target price lowered from 600p to 480p.
Important (and less important) announcements
- According to Reuters, production delays affected CFM (Safran/General Electric), which affected Airbus.
- Stellantis and Samsung SDI will build a new joint venture battery manufacturing facility in Indiana.
- The name of the next CEO of Société Générale will be announced in the fall.
- TotalEnergies signs a contract for the sale of LNG with the Korean company Hanwha Corporation.
- Thales Alenia Space, a partner of OHB System, has reached a milestone in the development of the Copernicus CO2M satellites.
- Air France-KLM begins a €2.3 billion capital increase supported by France, the Netherlands and CMA CGM.
- Elogen (Gaztransport & Technigaz) and HIFraser join forces to produce green hydrogen in Australia and New Zealand.
- Visiativ grows in Germany.
- Esker strengthens partnership with Grant Thornton France.
- Uniti raises 8 million euros in a capital increase at a price of 2.85 euros per share.
- Gour Medical has published its reports.
In the world
- Snap: Action drops 31% post-session after disappointing quarterly results.
- Zoom Video: The stock jumped 17% in a session after a better-than-expected quarter.
Important (and less important) announcements
- According to the Wall Street Journal, Broadcom could pay about $140 per share of VMWare.
- Samsung plans to invest $356 billion over five years in strategic industries such as semiconductors and biotechnology.
- Nestlé Health Science acquires Brazilian organic, natural and plant-based food producer Puravida.
- Bolsonaro sacked in Braziland boss of Petrobras for the year. José Mauro Coelho was appointed just 40 days ago.
- Airbnb is expected to stop operating in mainland China, according to CNBC.
- Rakuten wants to list shares of Rakuten Securities on the stock exchange.
- Roche partners with biotechnology company Kalivir Immunotherapys.
- Starbucks leaves Russia.
- Dufri extends the concession for Heathrow Airport.
- Deutsche Lufthansa and MSC are reportedly leading the race for Italy’s ITA Airways.
- Aegon will sell its 50 percent stake in the joint venture with Liberbank to Unicaja.
- Toyota will cut its global production plan by 100,000 units in June.
- According to Bloomberg, Dexcom has targeted Insulet.
- Medmix continues to appeal the closure of its Polish site.
- Kalida completes the takeover of Cosabella.
- Klarna will lay off about 10% of its 7,000 employees, Swedish business newspaper Dagens Industri reported on Monday.
- Publications of the main results of the day: Intuit, Netease, Agilent, Adevinta, Ralph Lauren, CTS Eventim, Derichebourg… The whole agenda is here.