The stock market recovered in July. The Cac 40 (+1.72% today, 6,448.5 points) ended the month up almost 9%, its best monthly performance since November 2020 and the announcement of the first Covid vaccines. In fact, the Paris index signs here its first real increase in a month since the beginning of the year. If it did not fall (+0.02%) in March, it did not grow either.
This Friday, the day after the release of second-quarter US GDP figures – pointing to a freak recession, the only one likely to cheer the stock market – solid results were announced by big names in tech, luxury goods, banking and oil pushed the index even higher (+3.7% for the week), and this despite a new batch of economic indicators that were much less encouraging, particularly regarding inflation.
In the United States, real household consumption rebounded by 0.1% in June (+11% in nominal terms), in line with expectations, following a decline in the previous month that was held back by rising prices. The core PCE price index for personal consumer spending, the Fed’s most-tracked measure of inflation, rose 4.8% year-on-year after 4.7% in May. A rise in real consumption last month suggests consumer demand is holding up despite high inflation as consumers dip into their savings (personal incomes rose just over 0.6%). But the biggest news in the household spending statistics is the sub-component of employment spending, with wages continuing to rise. It may be that after all, contrary to stock market expectations, the United States is still far from done with inflation, and that the upward trend in wages will continue to put pressure on prices in the short term.
Eurozone inflation hit a new high of 8.9% for the year in July, suggesting the ECB will have no choice but to respond decisively in September with a key hike of 50 or even 75 basis points. But the stock market preferred to focus on the region’s surprise acceleration of 0.7% growth in the second quarter (after 0.5% in the first, despite a stagnant German economy), which according to economist Andrew Cunningham of Capital Economics definitely a bad thing. According to him, the impetus caused by the economy will fade and “fast”. “Much better than expected, second-quarter GDP growth in the eurozone is, at the moment, the best we’ve seen in a long time. The news that inflation is once again even higher than expected only underscores that the economy is in for a very tough time. We expect the recession to start later this year. » These GDP indicators “doesn’t change the fact that the deepening energy crisis, soaring inflation and rising interest rates risk pushing the region into recession later this year. »
+10% for Amazon, +7% for Hermès
In New York, the Dow Jones, the S&P 500 and, above all, the Nasdaq Composite are moving higher. The first cap of the USA, Apple gains more than 3%, whileAmazon jumped more than 10% after posting quarterly results last night that beat expectations. Exxon Mobil and Chevron also rose sharply after announcing record earnings, boosted by rising oil prices.
in Paris, Hermes shone at Cac 40 (+7.5%). The luxury saddler posted strong first-half results, marked by a sharp increase in profit, a record operating margin and a recovery in sales in China in June that was stronger than that of its rivals.
Loreal ends up more than 4% after reporting a 25.2% increase in net profit share for the first half and reaffirming its goal to increase turnover and results this year, higher than the global beauty market.
The greatest increase in Cac 40, Capgemini increased by 8.6%. SSII raised its annual revenue growth target at constant exchange rates following a strong first-half performance increase. Analysts consider the results even more impressive because expectations were already high.
Renault closed by more than 5%. The automaker raised its annual targets, while half-year results were hit by the semiconductor crisis and shutdowns in Russia, but came in well above analysts’ expectations.
BNP Paribas won almost 3%. The bank posted better-than-expected second-quarter results thanks to lower bad debt provisions despite the economic downturn and buoyant activity, particularly in the markets. Societe Generale and Crédit Agricole followed with growth of 3.2% and 2.2%, respectively.
Vinci rose in price by about 3%. The construction and concessions group raised annual targets for its airports division and confirmed other outlooks, while its net profit jumped to 1.9 billion euros in the first half from 682 million a year earlier.
against the trend Vivendi fell more than 7% after half-year revenue beat expectations while profit disappointed. The media and communications group did not provide a forecast, indicating that it remains “extremely careful” due to an uncertain macroeconomic environment.
With the exception of the flagship index, Air France-KLM increased by more than 4%. This year, the airline is expected to post its first positive annual operating result since 2019, following better-than-expected results in the first half of the year.