Cac 40 rebound, market revises rate hike expectations, Market News

The second quarter reporting season in the United States got off to a rocky start. After JPMorgan and Morgan Stanley disappointed yesterday, Wells Fargo and Citigroup released their June 30 accounts early Friday afternoon. The former reported a nearly halving of profit (-48%) due to increased bad debt provisions, while rising interest rates slowed mortgage activity. The fourth-largest bank in the United States boosted its loan loss provisions by setting aside $580 million (the same in euros), compared with more than $1.26 billion in provisions in the same period last year. Earnings amputation was less significant at Citigroup (-27%), which posted better-than-expected results. First of all, the market appreciates that the organization was able to take advantage of rising interest rates and trading activity supported by the volatility of financial markets. Shares on Wall Street rose by 10%.

While it is too early to draw any conclusions from these results, we will have to wait for the season to develop. The next few days will be busy in the United States in terms of publications. On Monday, two other banks, Bank of America and Goldman Sachswill manage, simultaneously with the computer giant IBM. Twitter, Tesla, Netflix, Johnson & Johnson, American Express and even Schlumberger will follow this week.

At the macroeconomic level, operators seem to have returned to greater prudence regarding the monetary policy of the US Federal Reserve System (FED). On Thursday, the scenario of a 100 basis point increase in interest rates Federal funds at the end of the meeting on July 26 and 27 dominated, bolstered by Wednesday’s announcement that inflation in June accelerated to 9.1% in one year. On Friday, stock markets lowered their expectations for a 75 basis point hike, the second in two months. Governor Christopher Waller and St. Louis Fed President James Bullard are in favor of such an increase.

Another element supporting the market: better-than-expected US economic performance. Thus, retail sales rose 1% last month (+0.9% expected), while manufacturing activity picked up in July in the New York area, an index calculated by the local branch They fed registering an unexpected increase to 11.1 points against -2, expected -1.2 in June. Finally, the University of Michigan consumer confidence index improved slightly in July, rising to 51.1 from 50 in June and the 49.9 consensus expected.

Abandoned luxury

In China, Beijing’s “zero Covid” policy came at a price: it led to a 2.6% drop in GDP between the first and second quarters. However, an improvement was seen at the very end of the second quarter, with a rebound in retail sales and industrial production in June, driven by the easing of medical restrictions. It remains to be seen how long this trend will last as cases begin to rise again. They are at their highest level since May. That bounce, combined with reports from Burberry and Richemont about their sales in China weighed on the luxury section of the Paris stock exchange during the session. But thanks to acceleration in the last stretch of the title LVMH, Kering and Hermes ended in green.

For its part, the title TotalEnergies rebounded by 3.14%. Major expects exceptional results in the refining and chemical industries in the second quarter. She already noted that the processing margin has more than tripled during this period.

Finally, Bedroom 40 gaining 2.04%, up to 6036 points, which allows him to be the winner in extreme during the week … 0.05%. The volume of trades increased to 3.2 billion euros. On the other side of the Atlantic, the three major indexes are also in great shape Dow Jones taking 2%, c Nasdaq Composite 1.5%.

The car accelerates

The largest increase in Cac 40, producer Renault rose 6.94%, and OEMs Faurecia and Valeo scored 5.56% and 4.5%, respectively. BofA Securities believes that fears about the auto sector are overblown. According to the author of the note, the cessation of Russian gas supplies to Europe may suspend production for several quarters, but the resumption of flows will lead to a rally during the second quarter reporting season.

finally, Dassault Aviation increased by 3.43%. JPMorgan took cover on the Falcon and Rafale maker’s name at a “neutral” level of €162.