Europe (virtually) renounces Russian oil

Europe (virtually) renounces Russian oil

Only one being is missing and not everything is necessarily depopulated on the stock market, since the European markets have chained a fourth consecutive session in the green, despite the closure of the Wall Street barometer for a holiday yesterday. Oh, there weren’t any major surges either, but generally 0-1% increases. The STOXX Europe 600 index thus reduced its losses to -8.5% since the 1er January. With the start of coupon payments, indices integrating dividends bulge out, like the CAC40 NR, which limits its 2022 losses to -6.6% (compared to -8.3% for the classic CAC40).

On the strength of the gains posted last week in the United States, investors stepped on the accelerator pedal by taking up a few risky bets, just to not miss the bandwagon. But since the Nasdaq was closed yesterday for Memorial Day, they set their sights on other assets. Luxury stocks for example, cryptocurrencies or Danish stocks (why Danish stocks?). What is practical with the financial markets is that we always find someone who thinks like us.

We therefore find managers who explain that we are in the middle of a rebound in a bear market, which implies that we must seize the present day but pay attention to the next day, contrary to Horace’s poem which recommends rather to forget what will happen in the future.

There are also bankers who think that you have to buy everything because even in the event of a second markdown, these sales are really interesting (and they will be right at one time or another).

We find the usual birds of doom who “had said it”, but who had already said it five years ago. And who will say it again (and who will be right at one time or another).

We find the cold-blooded animals who hammer that, anyway, it goes up in the long run (but who secretly tremble at their losses).

There are optimists, pessimists, clever people, idiots, dreamers, pragmatists, manipulators and manipulated people. This has been the great stock market game from the outset. Reread Zola’s Money. Nothing has changed.

But the big deal of the day is elsewhere. The Europeans finally agreed to a form of embargo on Russian oil. It was not easy but they reached a compromise, with some accommodations for Hungary and other countries ultra-dependent on energy supplies from Moscow. “Instead of targeting all Russian crude oil imports, the EU will ban Russian crude oil imports by sea for the next six months“, underlines ING, which could represent two-thirds of the volumes. But as Germany and Poland have announced their decision to reduce their purchases to zero via the pipeline which supplies them, this could concern around 90% imports by early 2023. The aim is to increase the pressure on Russian finances. The barrel logically reacted higher, but part of the news was already in the price, so there is no Brent still exceeds 123 USD, which will not help our energy bills.

Also note in the empyreumatic vapors of the early morning that two news items from China could bring grist to the mill for those who think that the country is getting out of the rut. First, the reduction in the number of cases of coronavirus contamination in the country. Given the importance of China on the global productive chessboard, any improvement is good to take to reduce the disorders affecting supply chains. Then, the publication of a less degraded than expected manufacturing PMI indicator in April. The official purchasing managers’ index rose more than 2 points to 49.6 points. It is above the average expectation of economists (49). Admittedly, this indicator must be above 50 points to signal a positive economic phase, but it has recovered in the right direction, which investors will be sensitive to.

European equity indices are heading for an uncertain open, waiting for US investors to invade the trading rooms again after their extended weekend. In Asia Pacific, the craze waned a little in Japan and Australia where the indices closed down. China, on the other hand, is rising. The publication of the advanced estimate of European inflation for May at 11:00 a.m. should fuel the machine for anticipating the next decision of the ECB until the US opening. That is to say, the moment when we will know if investors put a coin back into the machine to bounce tech stocks.

Economic highlights of the day

Three important indicators today, May inflation in the euro zone (11:00 a.m.), real estate prices in the United States (3:00 p.m.) and the Conference Board’s US consumer confidence index (4:00 p.m.). The whole macro diary here. This morning, Japan announced a contraction of -1.3% in its industrial production in April, while the consensus was positioned at -0.2%. And China therefore delivered a manufacturing PMI of 49.6 points for a consensus of 49 points.

The euro changed little at 1.0747 USD. The ounce of gold fell a few dollars to 1852 USD. Oil continues to climb with North Sea Brent at $123.32 a barrel and US WTI light crude at $118.65. The yield on US 10-year debt rose to 2.84%. Bitcoin goes back to 31,700 USD. The CAC 40 lost 0.3% to 6540 points at the opening.

The main changes in recommendations

  • Acerinox: Morgan Stanley goes from overweight to weighted online by targeting EUR 13.30.
  • Amundi: KBW goes from market performance to outperformance by targeting EUR 82.
  • Aperam: Morgan Stanley goes from online weight to overweight by targeting EUR 51.
  • Atome Energy: Liberum is starting to track purchases by targeting 181 GBp.
  • Aurubis: Bankhaus Metzler starts long tracking by targeting EUR 116.
  • Danone: Jefferies remains long with a price target raised from 58.50 to 63 EUR.
  • DWS: KBW goes from outperformance to market performance by targeting EUR 41.
  • Engie: HSBC goes from holding to buying, aiming for EUR 15.90.
  • International Consolidated Airlines: Morgan Stanley moves from overweight to weighted online by targeting 144.89 GBp.
  • HBM Healthcare: Baader Helvea goes from buying to accumulating aiming for CHF 292.
  • Kering: HSBC goes from holding to buying, aiming for EUR 600.
  • Lonza: Jefferies remains long with a price target reduced from 770 to 700 CHF.
  • Maisons du Monde: Citigroup goes from buying to neutral, aiming for EUR 14.
  • Rheinmetall: Berenberg remains long with a price target raised from 215 to 240 EUR.
  • Rieter: Research Partners remains long with a price target reduced from 240 to 160 CHF.
  • Siemens Healthineers: Barclays moves from online weight to overweight by targeting EUR 67.
  • U-Blox: Vontobel is still to be kept with a target raised from 75 to 82 CHF.
  • Volkswagen: HSBC goes from keeping to buying, aiming for 234 EUR.

In France

Important (and less important) announcements

  • TotalEnergies will make an announcement in hydrogen in the coming weeks.
  • Vinci wins the contract to build and maintain the electromechanical infrastructure of the Femern tunnel in Denmark for €535 million.
  • The activist fund Parvus AM holds more than 5% of the capital of Publicis.
  • FDA grants priority review to Sanofi’s Dupixent for the treatment of nodular prurigo in adults.
  • Eurofins acquires Repertoire Genesis.
  • Electricité de France will proceed with the closure of the British nuclear power station as planned despite a request for an extension.
  • Derichebourg has formalized its rise in the capital of Elior, stating that it does not intend to exceed the 30% mark.
  • Arkema partners with Nippon Shokubai to produce LiFSI electrolyte salt for EV batteries.
  • “Major” contract between Eutelsat and Telenor Maritime for connectivity services at sea.
  • JCDecaux signs the exclusive contract for in-store digital screens for Galeries Lafayette Paris Haussmann.
  • Toosla continues to develop its fleet with the first vehicles of the Peugeot brand.
  • Altheora wins a €1.4 million contract with a railway equipment manufacturer.
  • Delfingen sold its Russian activities.
  • Amoeba announces the postponement to the second half of the decisions of the EPA in the United States on its biocide.
  • Italy uses Inertam (Europlasma) for its asbestos waste.
  • Safran, Seb and Ipsen detach coupons.
  • Gaztransport & Technigaz, Eramet and Maisons du Monde hold their general meetings.
  • BigBen, Exel Industries, Les Hôtels de Paris and Nacon have published their accounts.

In the world

Important (and less important) announcements

  • The Dutch Royal DSM will merge with the Swiss Firmenich. DSM shareholders will own 65.5% of DSM-Firmenich. The rest of the sector should move, such as Givaudan and Robertet (of which Firmenich holds 21.8%). Lanxess and Advent will acquire DSM’s Engineering Materials division for €3.7 billion.
  • Credit Suisse is reportedly looking for ways to bolster its capital, Reuters has learned.
  • Telecom Italia is considering a valuation of €20 billion for its fixed network activity.
  • GlaxoSmithKline will pay up to $3.3 billion to buy the private American biotech company Affinivax.
  • Foxconn expects a more stable supply chain in the second half of 2022.
  • Poenina shareholders give the green light to the merger with Burkhalter.
  • Unilever appoints Nelson Peltz as non-executive director.
  • Bavarian Nordic raises its annual forecast for 2022 after monkeypox vaccine deals.
  • Bercy denies having validated a tax optimization scheme for General Electric.
  • FDA approves Roche’s Evrysdi treatment in infants.
  • DKSH acquires the Malaysian Acutest Systems.
  • Adler Group has canceled a sale of a portfolio of real estate projects valued at €313m after buyer Partners Immobilien Capital Management failed to make the remaining payments.
  • Bone Therapeutics signs a dilutive financing of €5 million.
  • The main publications of the day: Salesforce, HP Inc, KE Holdings, Strabag, Dottikon, Victoria’s Secret, Pennon, Wavestone… The whole agenda here.