CAC40: gains almost 1%, bullish trend on Wall Street – 08/03/2022 at 17:46

(CercleFinance.com) – The Paris stock market ended the day’s session up 0.97% to 6,472 points, far from its daily high of 6,476 points, a trend shared by the E-Stoxx50 (+1.3). %), in Frankfurt (+1%) and to a lesser extent in London (+0.4%).

Markets are supported by good momentum across the Atlantic, with the S&P500 and Dow Jones gaining 1%, trailing the Nasdaq, which suggests more than 1.8%, despite a +5 point US rate hike to 2.791%.

However, the “numbers of the day” in the United States are mixed, primarily with the worst: US private sector activity contracted in July for the first time since June 2020, according to the S&P Global Composite PMI, which ended at 47.7 (revised from 47 .5 in the previous estimate), after 52.3 in the previous month.

A pleasant surprise, however, was the increase in orders for US industry by +2% (according to the Commerce Department, they increased by +1.8% in May).

For its part, industrial supplies rose 1.1% in June after rising 2.1% in the previous month.

Including a 0.4% increase in inventories, the inventory-to-shipment ratio was broadly flat at 1.46 versus 1.47 previously.

For its part, Germany returned to a trade surplus in June, according to Destatis, at 6.4 billion euros, after a deficit of 0.8 billion the previous month.

The Federal Statistics Office explains that this return to positive territory is the result of a 4.5% increase in German exports, well above the slight increase in imports of 0.2% compared to May.

But it’s not all good news: this morning investors learned of a decline in the S&P Global composite PMI in the Eurozone.

Activity there slowed from 52.5 in June to 51.7 in July, reflecting a third straight month of contraction in private sector growth, the slowest pace since April 2021.

The final so-called “composite” index of overall activity in the region came in at 49.9 last month, down from 52 in June, marking the first decline in activity since February 2021.

Industrial output recorded its biggest contraction since May 2020, while activity continued to pick up in the services sector, but at the slowest pace in six months.

“Very high inflation in Europe is clearly having a negative impact on demand as service providers and manufacturers report greater reluctance from customers to place orders,” said Joe Hayes, senior economist at S&P Global.

The trend is identical in the eurozone’s private sector, the index in question also fell sharply in July, a surge in inflation dampening the expected recovery in consumption after the lifting of health restrictions, monthly PMI surveys showed on Wednesday.

Among the “market drivers” of the day, we can also mention the very “hawkish” speeches in the face of inflation by three Fed members in 24 hours: after Charles Evans (Chicago Fed) and Mary Daly (San Francisco Fed), James Bullard (St. Louis Fed) should affirm that firm and decisive action is needed in the face of inflation in the United States.

In Europe, our OATs are trending +7 points to 1.445%, Bunds +9 points to 0.873%, Italian BTPs are flat at 3.04% (spread narrowing to +217 from the Bund).

Finally, OPEC disappoints by announcing an increase of only +100,000 barrels in September, while Europe desperately needs to make up for the amount of oil it has decided to divest itself, rising +0.8% to $100.7 a barrel.

A flurry of results releases continues in Europe, including announcements from BMW, Infineon and Siemens Helathineers.

In France this morning, several heavyweights of the caliber of AXA, Société Générale or Veolia published their accounts.

The resurgence of geopolitical risk should also curb investor appetite in the tense context of Nancy Pelosi’s visit to Taiwan.

Beijing announced last night that the People’s Liberation Army will conduct large-scale military exercises and training activities, including live ammunition training, in the waters and airspace of the China Sea in the coming days.

Meanwhile, falling oil prices should continue to weigh on the energy sector, with US light crude oil (WTI) continuing to fall to $94.4 a barrel this morning.

In value news, AXA (+5.6%) reports net profit for the first six months of 2022 increased by 3% to €4.11 billion, while operating profit increased by 8% (+7% on an organic basis) to €3 .92 billion (that is, 1.65 euros per share).

Veolia (-2.7%) reports group net current revenue share of €528 million for the first half of 2022 and EBITDA of €2.95 billion, up 6.1% at constant volumes and exchange rates compared to by the combined Veolia-Suez group a year earlier.

Societe Generale (+3%) posts an underlying share of group net profit (excluding the impact of the exit from Russia, which represented a pre-tax loss of 3.3 billion) of 11.5% to 1.5 billion euros for the second quarter of 2022.

Finally, Saint-Gobain (+1.2%) indicated that it had successfully launched a €1.5bn bond issue in three tranches of €500m each with maturities of three, six and ten years and coupons of 1.625%, 2.125% and 2.625%, respectively.

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