CAC40: a rebound begins as Wall Street turns around

(CercleFinance.com) - Investors have been breathing a little easier for the past hour: after a very poor start to the session, Wall Street has made up its initial losses (S&P500 and Nasdaq) and the Dow Jones and S&P500 are even up +0.
5%, while the Nasdaq is up +0.2% (this remains highly volatile and probably reflects short-sale buying).
The Paris Bourse is down only -1.3% at 7,415pts (a 'low' was recorded at 7.340 around 1 p.m.).

The CAC40 is nevertheless shattering its 7,490/7,500 support, and would need a 'miracle' recovery of a further +1% to save it.

The trend continues to be weighed down by heavy declines for STMicro (-12%), Renault and Stellantis (-9.5), Kering (-7%) and Vivendi (-6%).

The Euro-Stoxx50 is down -1.2%, in the wake of Amsterdam (-1.8%), but manages to climb back above 4,400.

In the wake of Wall Street's biggest fall since mid-December 2022 (the Nasdaq plunged -3.65%, the 'SOXX' -5%), US indices reopened with the Nasdaq plunging a further -1.6% to 17.050 (i.e. -5.2% in 7 hours of continuous trading), with the S&P500 dropping -0.6% and the associated VIX jumping +6.5% to 19.3 after +17% the previous day, i.e. almost +24K in less than 48 hours.
Tesla shares lead the hunt for dumped prices with +4%, Nvidia recovers +1%.... but the GAFAMs remain in the red (-1% on average).

The "US figures of the day" take a back seat to the tension in the tech sector: there was a pleasant surprise, however, in the US GDP, which grew at an annualized rate of 2.8% in the second quarter of 2024 (i.e., a doubling compared to "Q1"), according to a first estimate from the Commerce Department, thus largely exceeding expectations such as those of Jefferies (+1.6%).

This growth is mainly attributable to increases in consumer spending, inventory investment and business investment.

In addition, the PCE price inflation index stood at +2.6%, compared with an increase of +3.4% in the first quarter. Excluding food and energy prices, the index fell by -20%, from +3.7% to +2.9% quarter-on-quarter.
Orders for durable goods fell again in June, after four consecutive months of increases, reported the Commerce Department on Thursday.

After rising by 0.1% in May, these orders fell by 6.6% last month, due to a 20.5% drop in orders for transport equipment, a highly volatile item.

Excluding transportation, however, durable goods orders rose by 0.5%, well above the 0.2% increase forecast by economists.

Finally, the Labor Department announced that 235,000 new jobless claims were registered in the US in the week ending July 15, down by 10,000 on the previous week, which was revised upwards from 243,000 to 245,000.
In Europe this time, there was no cause for celebration: investors took note of the fall in business sentiment in France, which - as was to be expected - deteriorated sharply in July compared with the previous month, according to the Insee synthetic indicator, which dropped five points to 94, its lowest level since February 2021.

Still on the statistics front, Germany's Ifo business climate index fell from 88.6 in June to 87 in July, a drop 'much greater than the consensus (88.9)', but closer to Capital Economics' forecast (87.5).

On the bond market, German Bund yields eased by -2.5pts to 2.417%, while our OATs eased by -2.8pts to 3.1230%.
Same movement across the Atlantic, with ten-year paper down 6pts to 4.224% (after +5pts on Wednesday evening, a rather strange move given the wave of risk-offs that plagued Wall Street).
There's nothing to report on the currency front, with the Euro/$ stuck at around 1.0840.

While Sanofi this morning raised its outlook for 2024 (the stock leads the CAC with +5%), STMicroelectronics revised its outlook downwards, citing the reluctance of its customers in the automotive sector (the stock plunged as much as -15% this morning).
Similarly, Stellantis recognizes that sales are not living up to expectations: on Thursday, the multi-brand manufacturer unveiled lower-than-expected first-half results. Net sales fell by 14% to 85 billion euros in the first six months of the year, giving operating income before non-recurring items of 8.5 billion euros, or a margin of 10%. By way of comparison, the consensus forecast was for sales of 86.5 billion euros, operating profit of 8.8 billion euros and a profit margin of 10.2%.

Air France-KLM reports net income of 165 million euros for the second quarter of 2024, down 447 million euros, with operating margin down 3.1 points to 6.5%, despite sales up 4.3% to 7.95 billion euros.

In line with its preliminary announcement, Dassault Systèmes reports non-IFRS EPS of 0.60 euro for the first half of 2024, up 10% at constant exchange rates, with a non-IFRS operating margin of 30.5% versus 31% for the same period in 2023.

Finally, Eurazeo announces assets under management (AUM) of 35.3 billion euros at the end of June 2024, up 9% year-on-year, including fee-generating assets (FPAUM) of 25.7 billion (+10% year-on-year).

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