After a decline of 1% last week, the Paris Bourse managed to scavenge a few fractions on Monday, in a generally sluggish European market due to the closure of Wall Street. The 40 close on a slight 0.22%, at 6,567.54 points, in a very low trading volume of less than 2 billion euros. Due to the rapid spread of the delta variant, caution is required. “The markets could be plagued by temporary doubts due to the novel variants of the coronavirus, but the results [d’entreprises] should constitute an additional motivation for a new progression of actions, however reassures Jaime Espejo, of the management house Imantia Capital in Madrid, quoted by Bloomberg. He added that vaccination and stimuli provide strong support for longer-term actions.
The improvement in the economy is confirmed in the euro zone, with the PMI IHS Markit composite index reaching 59.5 points in June, its best level for 15 years, while that of services stood at 58.3 points, unheard of since mid-2007. This acceleration is nevertheless accompanied by a strengthening of inflationary pressures in all sectors. The whole euro area economy “Is now running at full speed, notes Chris Williamson, chief economist at IHS Markit. However, the recent rise in inflationary pressures […] encompasses the entire economy, with rising costs prompting service providers to make the largest monthly rate hike in more than two decades in June, while ex-factory price inflation has shown a similar pace “. Jessica Hinds of Capital Economics is more reassuring in maintaining that “The rise in inflation will prove to be temporary as shortages in certain sectors should diminish in the second half of the year.”
The Fed’s tapering on everyone’s mind
On Friday, in New York, the S&P 500 and the Nasdaq Composite closed on new records, boosted by the creation of 850,000 jobs in the non-agricultural sector in June, more than expected, while the increase in hourly wages, without surprise slippage, suggested that there was no urgency for the Fed to reduce the amount of its asset purchases, the first step in the normalization of monetary policy before the interest rate hike.
Traders and investors will be keeping an eye on the Fed this week, with the release of the June 15-16 Monetary Policy Committee meeting report on Wednesday evening. These “minutes” should provide some indication of the state of discussions regarding the reduction of the asset purchase program.
Showdown between Saudi Arabia and the Emirates
The broadly stable North Sea Brent barrel hovers around $ 76 per barrel (up from 76.17 at Friday’s close and a two-and-a-half-year peak at 76.74 Thursday) as members of the ‘Opep + still cannot agree on a further gradual increase in production for the coming months and the renewal of their agreement in 2022. More precisely, almost all the member countries of the enlarged organization are ready to increase production of 2 million barrels per day between August and December, with the exception of the United Arab Emirates, which is asking for a change in the method of calculating their own quotas, which would allow them to increase their production to 700,000 barrels per day. A proposal rejected by Saudi Arabia which called for “Compromise and rationality”. For now, mediation attempts by other cartel members have failed to ease tensions between Riyadh and the Emirates, Bloomberg reports citing delegates.
Legrand at the highest historical
On the value side, ArcelorMittal gained more than 1% in the wake of higher iron ore prices as the Tangshan metallurgical hub in China began the process of cutting production.
Legrand visited new all-time highs on the stock market after buying advice from Deutsche Bank. The shares of the specialist in low-voltage electrical equipment also gained more than 1%. The analyst in charge of monitoring Legrand welcomes the ” high increase “ and the “Pricing power” of the group which will publish its accounts for the first semester at the end of July.
Carrefour ended up 0.8% while, apart from the Cac 40, Casino gained a little more than 1%. The European distribution sector is animated by the prospect of a stock market battle over the takeover of the British supermarket chain Wm Morrison. The latter accepted an offer of 6.3 billion pounds from the Fortress Investment Group fund, but Apollo Global Management has confirmed that it is considering a possible counter-offer. In London, Wm Morrison jumped more than more than 11%, to 268.8 pence, above the 254 pence offered by Fortress.
Finally, among the biggest drops in SRD, EDF fell 1.7%. Economy Minister Bruno Le Maire said it will be difficult for France to accept the demands of the European Commission regarding the reorganization of the group. “I will not let the European Commission dismantle EDF”, he said Sunday on LCI. JPMorgan analysts, for their part, believe that a complete reform is unlikely to be implemented before the presidential election.