The reporting season for the second quarter began in the US ambiguously. After JPMorgan and Morgan Stanley disappointed yesterday, Wells Fargo and Citigroup released their June 30 earnings early Friday morning. The former reported a drop of almost half (-48%) in its profits due to an increase in provisions for bad debts, while rising interest rates slowed down mortgage activity. The fourth-largest bank in the US bolstered its loan loss provisions by setting aside $580 million (the same in euros), while taking on more than $1.26 billion in provisions in the same period last year. Profit amputation is less significant at Citigroup (-27%), which performed better than expected. First of all, the market appreciates that the establishment was able to take advantage of rising interest rates and trading activity, supported by the volatility of financial markets. Shares are up 10% on Wall Street.
While it is too early to draw any conclusions on these results, we will have to wait for the continuation of the season. The coming days will be busy in the United States in terms of publications. On Monday, two other banks Bank of America as well as Goldman Sachswill be at the helm at the same time as the computer giant IBM. Twitter, Tesla, Netflix, Johnson & Johnson, American Express and even Schlumberger will follow this week.
On a macro level, operators appear to have returned to greater sanity regarding the monetary policy of the US Federal Reserve (Fed). On Thursday, a 100 basis point interest rate hike scenario federal funds according to the results of the meeting on July 26 and 27, they dominated, supported by the announcement on Wednesday about the acceleration of inflation in June to 9.1% per year. On Friday, equity markets lowered their expectations and expect a 75 basis point gain, the second in two months. This tightening is backed by Gov. Christopher Waller and St. Louis Fed President James Bullard.
Another element of market support: better-than-expected US economic performance. Thus, retail sales rose by 1% last month (+0.9% expected), and manufacturing activity recovered in July in the New York area, according to an index calculated by the local office. fed fixing an unexpected rise to 11.1 points against -2 expected -1.2 in June. Finally, the consumer confidence index calculated by the University of Michigan improved slightly in July, rising to 51.1 from 50 in June and 49.9 expected by consensus.
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, the improvement came at the very end of the second quarter, when retail sales and industrial production resumed in June, helped by the easing of medical restrictions. It remains to be seen how long this dynamic will last as infections start to rise again. They are at their highest level since May. This rebound, combined with announcements from Burberry and Richemont about their sales in China, weighed on the luxury goods segment on the Paris Stock Exchange during the session. But thanks to the acceleration in the last stretch, the titles LVMX, Kering as well as Hermes turned out to be green.
For its part, the title Total Energy recovered by 3.14%. The company expects exceptional results in the refining and chemical industries in the second quarter. Refining margins have more than tripled over the period, she said.
Finally, Bedroom 40 gaining 2.04%, up to 6036 points, which allows him to be the winner last resort per week by … 0.05%. Trading volume increased to 3.2 billion euros. Across the Atlantic, the three major indices are also in great shape. Dow Jones taking 2%, NASDAQ Composite 1.5%.
The car is accelerating
Biggest gain Cac 40, manufacturer Renault up 6.94% while OEMs fauresia as well as Valeo increased by 5.56% and 4.5% respectively. BofA Securities believes that concerns about the automotive sector are exaggerated. According to the author of the note, the reduction in Russian gas supplies to Europe could stop production for several quarters, but the resumption of flows will lead to a rally during the reporting season for the second quarter.
Finally, Dasso Aviation rose by 3.43%. JPMorgan has taken over the Falcon and Rafale manufacturer’s name with a “neutral” target of €162.