The Paris Stock Exchange (and probably Wall Street this evening) ended a trying week very badly, with a plunge of nearly 6% in the CAC 40 in just 4 sessions, fueled by the ECB’s offensive against inflation and a increase in consumer prices in the United States greater than expected, which augurs for a restrictive policy by the Fed. Across the Atlantic, “do not count on a compromise from Jerome Powell”, the Fed seems determined to “raise its rates in the coming months, and this almost whatever happens”, judges the German giant of the DWS asset management.
As for the ECB, it seems to have embarked on a long crusade in the face of inflation, with a whole series of key rate hikes to come. Enough to fuel fears of fragmentation within the euro zone, the countries deemed to be the most fragile suffering from the surge in long-term rates. That of Italy (3.80% at the time of writing, against less than 1% a year ago) is already approaching the psychological bar of 4%. In the end, the rise in government bond rates is accentuated on both sides of the Atlantic, with probable turbulence as a result.
The specter of stagflation
On the growth front, the budgetary support of the States “remains a key element in order to contain the risks of recession, in particular in Europe, even if the situation will continue to deteriorate gradually”, judges Alain Guélennoc, chairman of the executive board of Federal Finance. Management, for whom the risk of stagflation (prolonged period of low growth and high inflation) is on the table, due to the multiplication of shocks (war in Ukraine, Chinese containment, tightening of the monetary policies of the Fed and the ECB). Especially since the major institutions, such as the IMF and the World Bank, have recently slashed their forecasts for global economic growth, for 2022.
Momentum pulls out of the game
In this turbulent stock market context, Momentum, Capital’s stock market and cryptocurrency newsletter, once again managed to hold its own, taking advantage of its selective and cautious approach. Our forecasts on the CAC 40 have materialized in particular, Friday’s bearish acceleration having been correctly anticipated, following the break of a key support.
On the equities side, we delivered our expectations on the CAC 40, BNP Paribas, Saint-Gobain, Orange, GL Events, Abeo, Airbus, Figeac Aero, Euroapi (recently released from the bosom of Sanofi), Prodways, Thales… with up or down forecasts.
On the cryptocurrency front, we gave our opinion on the future path of bitcoin, while Laurent Albie, manager of Next Momentum, gave his anticipation on ada (Cardano).
Overall, our selection once again outperformed the equity market, outperforming the CAC 40 overall, such as Thales, Abeo, Sanofi, Figeac Aero and even from Prodways, which brought in big (and in a short time) to our readers, our first objective (set a little below the high point of the week) having been reached. BNP Paribas and Saint-Gobain evolved in line with our expectations.
Conversely, the course of Airbus has been disappointing, the aircraft manufacturer having revealed rather poor monthly activity figures (only 13 new orders for commercial aircraft in May, for 47 deliveries), while fears linked to the Combat System of the future (SCAF) also weighed on the trend.
In addition, Atos, which had started the week with a bang, still buoyed by takeover and restructuring hopes, has turned the tide in recent days, press rumors reporting a disagreement between the new CEO and the chairman. on the strategy to follow. And our protective stop (automatic sell order at trigger level) suggested below 23.70 euros proved to be wise, since it allowed our subscribers to cut their losses fairly quickly and thus avoid the downward acceleration. from Thursday to Friday.
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Author’s declaration of interests