After Netflix, before Tesla

After Monday’s big rebound, the equity indices held up yesterday to close on fairly solid gains, although far from those visible at the best times of the day. And it’s already not so bad, since this kind of session started with the pedal to the metal often ends in discomfiture, for lack of fuel to last until the end of the day. We still do not know very well what motivates the improvement, which we will therefore put on the account of the results published by companies for the third quarter. US bank profits may be falling, but investors are focusing on the positives, including companies’ ability to pass on rising costs. What is certainly bad news for our wallets is not bad news for the stock market. Investors who also appreciated last night the figures of Netflix or the airline United Airlines, which exceeded market expectations.

Previously, the S&P500 had gained +1.1% at the close, while the Nasdaq offered +0.8%. In Europe, the Stoxx Europe 600 ended up 0.3%, but some markets did better, such as the German DAX (+0.9%) or the Scandinavian OMX (+1.5%). On both continents, it was industrial and cyclical stocks that drove the indices up, and more generally opportunistic buybacks all over the stock market. FOMO, in this case the fear of missing THE rebound, has not disappeared from the market, but it is clear that investors are still tiptoeing there.

In this complex environment, the automotive sector shone. Is this the return of the Paris Motor Show after four years of absence? Is this the rebound in registrations in Europe in September? Anyway, it’s been the best on the stock market for a week, just behind the airlines. As much to say it right away, I have no passion for cars. Even if in a rather funny way I find myself regularly contacted as an “automotive journalist” because of an ephemeral ten-year-old collaboration which earned me a good place on Google in the theme. This is the magic of SEO. At the same time, I don’t appear in any search on heartbreaking puns, which upsets me the most.

If I’m talking about automobiles today, it’s because I woke up at an odd hour this morning, tormented by a question: what if I had made a huge mistake by buying this electric car? Because you see, it’s one thing to drag from village to village in the depths of Burgundy on a rainy Sunday afternoon with 11 km of autonomy to find a free terminal. Or to explain at aperitif time that I’m very happy to pay 10 bucks to travel 350 km (*without heating, in a temperate climate, without driving too fast on the highway, without headlights, without too steep a slope strong).

But it’s another thing to be unable to recharge your vehicle in your own garage due to blackout. Or to wonder what will happen if the price of electricity soars durably while that of gasoline fluctuates within its usual bounds. Currently, the price per kilometer of an electric car is indeed “three to four times lower than that of a thermal vehicle“, explains on its website EDF, which has no interest in saying anything else since it sells electricity and not diesel. Based on current electricity prices it is true. But if the prices explode? I’ll look smart. Another good illustration of the adage “things never go as badly as you fear, but never as good as you hope“, even if we all dream that a plan goes off without a hitch, to use the words of a well-known philosopher (Socrates or Hannibal Smith, I don’t remember). It’s a bit the same thing in the stock market and this explains why one must avoid igniting at the sound of the bugle or collapsing at the sound of the cannon.

What do we have to get our teeth into today on the markets? Inflation in the United Kingdom (8:00 a.m.) and in the euro zone (11:00 a.m.). These are the numbers for September. They will be fresh on the British side and perhaps already seen for Europe, since Eurostat has already published its rapid estimate at the very beginning of the month (10% inflation over one year in this case). In the United States, the mood is rather real estate with housing starts and building permits in September (2:30 p.m.). There will also be the latest edition of the Fed’s Beige Book, published at 8:00 p.m., which brings together the economic expectations of the regional banks that make up the central bank. In Ukraine, Russia is hitting infrastructure with drones. In the United Kingdom, Liz Truss stacks the records: the latest, that of being criticized by 8 out of 10 Britons. In the United States, Joe Biden should announce a new marketing of oil from strategic reserves, to try to affect the price of fuel. Any proximity to the midterm elections is obviously fortuitous.

Publications of quarterly company results continue, with a few sectoral barometers: Tesla for the automotive industry, Nestlé for general consumption, ASML for the semiconductor industry, Abbott for health or International Business Machines for computer services. Tesla and IBM publish post-US close.

The day ends in disorder in Asia Pacific. China (Hong Kong and Shanghai) and Korea retreated, while Tokyo, Bombay and Sydney continued their ascent with moderate gains. European leading indicators are bullish again this morning. The CAC40 gained 0.4% to 6091 points at the opening.

Economic highlights of the day

In Europe, UK (8:00 a.m.) and Eurozone (11:00 a.m.) inflation is on the agenda. In the United States, September building permits / housing starts will be announced at 2:30 p.m. The whole macro diary here.

The euro is trading at 0.9847 USD. The ounce of gold varies little at 1649 USD. Oil is falling, with Brent from the North Sea at $90.57 a barrel and US light crude WTI at $83.86. The yield on US 10-year debt rose to 4.02%. Bitcoin remains close to USD 19,300 per unit.

The main changes in recommendations

  • Allgeier: Oddo BHF resumes outperformance monitoring by targeting EUR 40.
  • Almirall: Morgan Stanley goes from overweight to line weighting by targeting EUR 12.50.
  • AstraZeneca: Berenberg remains long with a price target reduced from 12,000 to 11,800 GBp.
  • Covestro: Baader Helvea pass accumulated to buy aiming for 41 EUR.
  • CPH: Baader Helvea goes from buying to accumulating with a price target reduced from 87 to 75 CHF.
  • EMS-Chemie: Baader Helvea goes from accumulating to reducing, aiming for 575 CHF.
  • Ence Energia y Celulosa: Jefferies starts the hold call by targeting EUR 3.75.
  • Fresenius Medical Care: resumes line-weighted follow-up targeting EUR 34.
  • Fuchs Petrolub: Baader Helvea goes from accumulating to buying, aiming for EUR 37.
  • ISS: Goldman Sachs moves to sell Neutrons targeting 147 DKK.
  • K+S: Baader Helvea goes from accumulating to buying, aiming for EUR 27.
  • Marston’s: HSBC goes from selling to keeping, aiming for 40 GBp.
  • MIPS: Berenberg remains to be held with a price target reduced from 480 to 330 SEK.
  • Sandvik: Jefferies remains long with a target price reduced from 273 to 210 SEK.
  • Siegfried: Baader Helvea remains long with a price target reduced from 2050 to 950 CHF.
  • Sika: Baader Helvea remains on the buy side with a price target reduced from 365 to 275 CHF.
  • UBS: Jefferies remains long with a price target raised from 18.60 to 19 CHF.
  • Veolia: Morgan Stanley goes from line weighting to overweighting.

In France

Business results

  • Esker: Nine-month sales increased by 13%. The group confirms its organic revenue growth target of between 12% and 14% and its profitability target of between 13% and 15%.
  • Mercialys: The property company confirms its objectives after a 0.8% increase in rental income in Q3.
  • Sartorius Stedim Biotech: The group lowered its sales forecast but confirmed its margin target in 2022, after a Q3 below expectations.
  • Virbac: Revenues are up 7.7% like-for-like over nine months. The annual revenue growth forecast has been tightened to “6 to 9%” (5 to 10% previously) and the margin will be between 14 and 15% (“around 15%” previously).

Important (and less important) announcements

  • TotalEnergies inaugurates Qatar’s first large-scale solar power plant Al Kharsaah.
  • Alstom obtains a service contract worth approximately €300 million from the British operator GTR. In addition, the group signed a framework contract with Rete Ferroviaria Italiana for the supply of an ERTMS signaling system for central and southern Italy.
  • Gaztransport & Technigaz obtains two orders for the design of the tanks of three new LNG carriers.
  • Casino has finalized the sale of GreenYellow to Ardian.
  • Argan delivers a second warehouse near Caen that produces its own green energy.
  • ECA Group (Groupe Gorgé) and iXblue join forces and become Exail.
  • Reworld completes the acquisition of a division of Unify from TF1.
  • Dolfines acquires Maintcontrol.
  • Grolleau signs an industrial partnership with IES Synergy for the deployment of its next generation of ultra-fast charging stations.
  • Carmat and Amoéba announce the publication of articles on their products (not together, huh).
  • Nanobiotix reaches a definitive agreement for the restructuring of the loan granted by the European Investment Bank.
  • Haulotte, Sidetrade, Bastide, Bourse Direct, Nicox, Pierre & Vacances, Enogia, Omer-Decugis and Broadpeak have published their accounts.

In the world

Business results

  • Adobe: The action gains 3% off session after the publication of its quarterly and its new objectives.
  • ASML: The group is targeting 61 to 6.6 billion euros in Q4 revenue and sees little impact for the moment from the new American technological restrictions towards China.
  • ASOS: The group issues a warning on its outlook, consumers feeling the effects of inflation.
  • BHP: The mining group maintains its production forecast unchanged for the financial year ended September 30, 2023.
  • Just Eat Takeaway: Cost reductions allow operating breakeven to be achieved a little earlier than expected.
  • Nestlé: Sales are boosted by price increases. Growth is expected to grow by 8% this year.
  • Netflix: The title jumped 14% outside the session after the publication of quarterly results.
  • United Airlines: The action rose 6% off session after the publication of quarterly results.

Important (and less important) announcements

Readings

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