The Paris Stock Exchange remains in the green, although moving below its highs of the day. Investors are torn between continued cheap buying and recession fears. They are also wondering about the impact of the economic slowdown on the monetary policy of central banks in the hope that they will be less aggressive. However, the growth of stocks associated with raw materials is a supporting factor.
mid session, Bedroom 40 added 0.30% to 6,091.74 points after a peak of 6,156.60 (+1.37%) on a business volume of 750 million euros. Contracts future American indices take from 0.4% to 0.7%. The S&P 500 gained 6.5% last week, its best weekly performance in a month.
What about income projections?
According to strategists at Morgan Stanley, European equities have not yet priced in recession risk despite low valuation levels. ” Equity markets typically retreat two to three weeks before earnings forecasts begin to be revised down, but earnings have not yet begun to slide into negative territory. “, – they stress. They expect that the decline in the forecast for earnings will begin in the third quarter.
This last week of the first half should also be driven by a portfolio adjustment by large institutional investors, which should support the markets. Marko Kolanovic, chief market strategist at JPMorgan, said these adjustments should lead to a significant increase in inventories, especially as the market is oversold. Ipek Ozkardeskaya, an analyst at Swissquote Bank, is more reserved, arguing that the extent of last week’s recovery raises questions: A 3%-4% gain in stocks is a sign that market volatility remains high, conditions are volatile and the rally may not last long. “.
Inflation is back on the menu for the week
Investors remain macro-focused as the inflation expectations component of the University of Michigan Consumer Confidence Index has stabilized against all expectations. Jerome Powell told Congress last week that a soft landing for the US economy is a problem and that the recession remains ” possibility “. He also stated that the Federal Reserve ” completely resolute to fight inflation.
San Francisco Fed President Mary Daly said on Friday she favors a 75 basis point hike in the Fed’s funds rate, while her St. Louis office colleague James Bullard said recession fears are exaggerated.
Inflation will be back in the spotlight this week following the release of US household income and spending statistics on Thursday, including the PCE component of personal consumption spending, the Fed’s most closely monitored measure of inflation. On the Old Continent, data on consumer prices in the euro area will be made public on Friday.
But before that this afternoon, the market will be keeping an eye on the performance of US durable goods orders in May, as well as home sales forecasts in the same month.
Car in the spotlight
Also, note that Russia defaulted on its foreign-currency debt for the first time since 1918, after the $100 million settlement deadline expired on Sunday. This default is a consequence of Western sanctions that prevent Moscow from making payments in euros or dollars.
The automotive sector is gaining momentum after a three-week fall in a row. fauresia rose 3.1% as Jefferies upgraded its OEM rating from Hold to Buy. Valeo follows with an increase of 2%, Michelin rose by 1.2% and Renault by 2.2%. plastic omnium provides himself with 2.5%. The Group has reached an agreement to acquire Actia Power, the vehicle electrification division of the French Actia Group, based on an enterprise value of EUR 52.5 million.
Valneva increases by 2.5%. The pharmaceutical group said it has received permission from the European Commission to market its inactivated Covid-19 vaccine in Europe. This permit applies to the 27 EU countries as well as Iceland, Liechtenstein and Norway.
EssilorLuxottica lose 1%. The group announced the death of its president Leonardo del Vecchio at the age of 87.
Ipsen fell 3.6% after announcing the acquisition of US oncology biopharmaceutical company Epizyme for an initial $247 million (€234 million).