China, ECB and results: things are happening!

The vast majority of equity indices gained ground over the previous week, with rare exceptions such as the British FTSE. The CAC40 has progressed enough to return to positive territory in 2024, by a few points. The Parisian index is nevertheless lagging behind the others this year, since the Stoxx Europe 600 has gained 9% since the 1^is January. The MSCI World index, which covers most of the major global markets, even gained 18%, while the American S&P500 was close to 22% gains. But thanks to its bullish explosion in recent weeks, it is the MSCI China which is leading the way, with 26% progress. This stock market strength is rooted in the belief that Beijing will make the necessary efforts to breathe new life into the Chinese economy, a hypothesis reinforced by a series of promising initial announcements.

However, this financial turmoil is accompanied by constant pressure: it is up to the Chinese authorities to tirelessly demonstrate the effectiveness of their recovery strategy. Faced with investors whose appetite for encouraging news seems insatiable, the government finds itself engaged in a sort of spiral of announcements. A somewhat unhealthy dynamic which reflects excessive reactivity to the feverish expectations of the market, where each statement is eagerly scrutinized.

Illustration with the last 72 hours. Investors had high hopes from the press conference organized Saturday morning by the Minister of Finance. It was rumored that consumer aid measures were going to be announced. Lan Fo’an simply strengthened the real estate support program and said there is room in the budget to do more. The reception was lukewarm, especially since the latest statistics published by Beijing had an air of déjà vu. Inflation came in lower than expected in September, while producer prices contracted more than expected. The stats came in on Sunday. These figures show that the deflationary threat is strengthening. Deflation is an economist’s nightmare, like a viscous thing that is very difficult to get rid of because the available corrective measures have deleterious side effects.

If we leave China aside, it is the quarterly results of companies that will set the trend this week. Friday on Wall Street, the figures from banks JPMorgan and Wells Fargo were impressive. Financiers saw this as a sign that the big Wall Street firms are awaiting the famous “soft landing” of the American economy with a certain serenity. This week, the sectoral scope will diversify: UnitedHealth, Johnson & Johnson and Abbott in health, Prologis and Crown Castle in real estate, Netflix for entertainment, Procter & Gamble for consumption and a large batch of financials, including Goldman Sachs and American Express. In Europe, big signings are also looming. For example LVMH from tomorrow in France, which will give a good idea of ​​the CAC40’s capacity to end the year better than it started it, or ASML, the largest European technological capitalization. There will also be Nestlé, Rio Tinto or EssilorLuxottica.

Information not to be missed to get the week off to a good start:

• Fitch maintains France’s credit rating after the budget presentation, but places it under negative outlook.
• Tension has risen further between the UN and Israel, after points of tension with UNIFIL in Lebanon. Several peacekeepers have been injured recently, collateral victims of the Israeli army’s offensive in the country.
• China has launched military maneuvers around Taiwan, as it does regularly.
• In Belgium, the municipal elections do not hold any big surprises, apart from the capture of a medium-sized town in Flanders by the far right and the rise of communitarian lists.
• SpaceX managed to bring a space launcher to rest by catching it with giant claws, in a pretty impressive feat of engineering.
• Macro agenda: the macroeconomic high point is scheduled for Thursday October 17 with the European Central Bank’s decision on its rates (probably a quarter-point cut) and the publication of American retail sales for September.
• Brief agenda: the Japanese and Canadian markets will be closed on Monday for a public holiday. In the United States, Monday is a holiday (Columbus Day) but not a holiday on Wall Street, even if activity should be more restricted than usual.

In Asia Pacific, the yo-yo of Chinese stocks clearly shows the circumspection of investors in the face of the latest announcements. Before the midday break, Hong Kong was losing ground and mainland markets were gaining moderately. Post-meridian recovery, the CSI300 increased its gains to 2.2% and the Hang Seng returned to positive territory. The MSCI China index, which somewhat synthesizes the City State and the continent, is up 0.5% at the same time. Elsewhere, the trend is upwards of around 0.4% in Australia, India and Taiwan. South Korea even progressed by 1%. As previously stated, the Tokyo Stock Exchange is closed. European places are expected to be around balance.

Today’s economic highlights

Not really any major indicator today. The whole agenda here.

The main changes in recommendations

• Adidas: TD Cowen maintains its recommendation to hold with a price target raised from 212 to 267 EUR.
• Air France-KLM: ING Bank maintains its recommendation to hold with a price target reduced from 12 to 9.50 EUR.
• Airbus: Barclays maintains its recommendation to overweight with a price target reduced from 170 to 161 EUR.
• Aperam: Citigroup remains neutral with a price target raised from 28 to 30 EUR.
• Bunzl Plc: JP Morgan goes from neutral to overweight with a price target raised from 3660 to 3980 GBX.
• Compass Group: Citi downgrades its buy recommendation to neutral with a price target of 2650 GBX.
• Dometic Group: Nordea Bank goes from selling to holding.
• Edenred: Goldman Sachs maintains its buy recommendation with a price target reduced from 53.50 to 43.50 EUR.
• Eiffage: Bernstein maintains its outperformance recommendation with a price target reduced from 144.20 to 139 EUR.
• Elior Group: Citigroup maintains its purchase recommendation with a price target raised from 4.90 to 5.50 EUR.
• Equinor: Morgan Stanley improves its recommendation to underweight to market weight with a price target of NOK 270.
• Galp Energia: HSBC starts monitoring for purchase with a price target of 20 EUR.
• Givaudan: Bank Vontobel AG maintains its buy recommendation and raises the price target from 4850 to 4950 CHF.
• Hermès International: CICC goes from outperformance to neutral with a price target reduced from 2100 EUR to 2000 EUR.
• L’Oréal: Citigroup remains neutral with a price target reduced from 440 to 420 EUR.
• Munters Group: Carnegie Group downgrades from hold to sell with a price target reduced from 225 SEK to 200 SEK.
• Pluxee: Goldman Sachs downgrades from neutral to sell with a price target reduced from 30.50 EUR to 18 EUR.
• Seb SA: Bernstein maintains its outperformance recommendation with a price target raised from 130 to 138 EUR.
• Spirax Group: Peel Hunt improves its recommendation from hold to buy with a price target of 8300 GBX.
• Stellantis: Morgan Stanley maintains its overweight recommendation and reduces the price target from 19 to 14 EUR.
• STMicroelectronics: TD Cowen maintains its buy recommendation and reduces the price target from 40 to 32 USD.
• TotalEnergies: Gerdes Energy Research LLC maintains its buy recommendation and raises the price target from 86 to 87 USD.
• Universal Music Group: ING Bank goes from buy to hold with a price target reduced from 33 EUR to 26.50 EUR.
• Vinci: Bernstein maintains its outperformance recommendation and reduces the price target from 148 EUR to 141.10 EUR.
• Zalando Se: RBC Capital maintains its outperformance recommendation with a price target raised from 42 to 50 EUR.

In France

Important announcements (and less important… I should point out that the information is given immediately before the opening and does not prejudge the color of the shares during the session)

• At Stellantis, Carlos Tavares does not rule out factory closures (interview with Les Echos).
• The French Minister of Finance, visiting a Sanofi site today, wants guarantees from the laboratory on the production of Doliprane, in the process of being bought by the CD&R fund with the rest of the group’s non-prescription drugs. The minister does not “refuse” from blocking the operation.
• Kim Jones leaves artistic direction of Fendi (LVMH).
• Patrick Partouche strengthens his control over Groupe Partouche.
• Transgene failed in the primary endpoint of phase II evaluating the combination of TG4001 with avelumab in cervical cancer.
• Nicox and Soleus sign $16.5 million financing agreement combining royalty sales and equity financing.
• Jonathan Dickinson is appointed Chairman of the Board of Directors of Innate Pharma.
• Acticor Biotech wants to launch a phase IIb with glenzocimab in angioplasty of ST-segment elevation myocardial infarction.
• Hopium increases its use of dilutive financing with Atlas.
• Néovacs reduces the par value of its shares from 0.0005 to 0.0001 EUR.
• The main publications of the day : …The rest here.

In the big world

Important (and not so important) announcements

D’Europe

• Frasers improves its takeover bid for Mulberry to 150 pence per share, but is again rejected.
• The Verdi union opposes a cross-border merger of Commerzbank, regardless of the nationality of the bidder.
• Givaudan invests 50 million francs in Indonesia.
• Smith & Nephew faces allegations of artificially inflating its profit margins, the Sunday Times reported, citing a report from Dragoneye Research.
• Veon moves its headquarters to Dubai after delisting in Amsterdam.
• X withdraws Unilever from advertising boycott lawsuit.
• The main publications of the day : Volkswagen AG, Galp Energia, Bossard…

From North America

• Boeing, in financial difficulties, will cut around 17,000 jobs and postpone the launch of the B777X.
• The FDA is reportedly considering reversing its ban on generic versions of Eli Lilly’s weight-loss drugs.
• The design of Tesla’s sporty two-seater robotaxi leaves experts perplexed. Lyft and Uber are taking advantage of this.
• The FDA authorizes a Pfizer treatment for certain types of hemophilia in the United States.
• Fisker bankruptcy plan approved after agreement on vehicle technical assistance.
• The main publications of the day : nothing…

From Asia Pacific and beyond

• BHP and Vale will face 620,000 plaintiffs in the trial over the collapse of a dam in Brazil, which will be held in London.
• Hyundai’s Indian subsidiary is launching a $3.3 billion IPO, the country’s largest-ever stock sale.
• TPG Telecom sells its fiber network and fixed line assets to Vocus for $3.54 billion.
• Bain makes a firm offer for Fuji Soft 7% higher than that of KKR.
• BYD plans to rapidly increase sales in Germany.
• The main publications of the day : Reliance Industries, HCL Technologies…

The rest of the global publications calendar here.

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