Weekly overview: Brussels slightly higher into the weekend
(ABM FN) The Brussels stock exchange has this week a small recovery on Friday ended the week slightly higher. The Bel20 closed at 3,708 points, or a plus of 0.6 percent on a weekly basis.
The first half of the year has now come to an end. “It’s a very, very bad start to the year,” said JPMorgan strategist Vincent Juvyns. Since the beginning of 2022, the Brussels main index has lost 14.6 percent.
Most notably, he finds both stocks and bond markets under pressure. According to Juvyns, we have to go back to 1969 to find such a scenario.
“Rising prices, pessimistic economic prospects and weak confidence are driving strong skepticism on the stock markets,” said IG market analyst Salah Bouhmidi.
Joost van Leenders Van Lanschot Kempen.
Earnings growth of around 10 percent is expected in the United States and Europe this year. For 2023, the forecast for the US is 10 percent and for Europe 6.5 percent earnings growth. “But what you also see is that the expectations are changes for both this year and next year,” said Van Leenders.
But, “if a recession comes, which is certainly possible, then those profits have to come down,” said the investment strategist. Although the losses on the stock markets are reflected, according to Van Leenders this has “not yet been fully priced in”.
Purchasing managers’ data pointed to a slowdown in manufacturing growth in the eurozone, while manufacturing in China has returned to growth.
Economist Chris Williamson of Markit points out that the output index in the eurozone is even pointing to a small contraction. That’s the first time in two years,e he. The industry reports that customers are becoming more cautious, Williamson said.
In the US there was a slowdown in growth in June. S&P Global’s purchasing managers index even fell to its lowest point in two years.
According to Williamson, the outlook in the US is bleaker. On the bright side, the pressure on the supply chain appears to be easing somewhat, which could help develop inflationary pressures in the coming months, the economist said.
Inflation figures point to cooling
Much attention has been focused this week on US PCE inflation. The core price index 0.3 May percent ten compared to the past month. Annual core inflation stood at 4.7 percent, down from 4.9 percent in April. Economists had forecast core inflation of 4.8 percent.
The Federal Reserve’s core price index as the key measure for and as a guideline for monetary policy.
Consumer prices in Germany rose less sharply in June than a month earlier and also than expected. It stood at 7.6 percent year-on-year, compared to 7.9 percent in May. Precalculated economists had expected 8.0 percent for June. In Belgium prices continued to rise, with a 9.65 percent in May, a record since October 1982.
In the eurozone also entirely at consumer prices. It stood at 8.6 percent in May, compared to 8.1 percent in May. Core inflation, a key indicator for the ECB, earned 3.7 percent, well below May’s 3.9 percent.
ING economist Carsten Brzeski pointed to economic support measures that have dampened development in Germany. “This is not (yet) a turning point, but rather proof that at the moment it is governments and not central banks that can push the odds back,” Brzeski said.
“It is an artificial decline,” said CBC Banque chief economist Bernard Keppenne.
According to Commerzbank.
The euro/dollar was down at 1.0394 on Friday, which is 1.5 percent lower on a weekly basis.
WTI oil Friday 107 dollars per barrel and therefore about 3 percent more expensive on a weekly basis. OPEC+ decided this week to ramp up oil production in August at the same pace as in July. Under the leadership of Saudi Arabia, it was decided to increase the daily production by 648,000 barrels per day in August. That’s equal to the increase for July, and more than the increase of 432,000 barrels that has continued in recent months.
Risers and Fallers
Fagron received a warning from the American FDA on 14 June. This emerged from a publication from the regulator on Tuesday afternoon. The warning came after an inspection of a Fagron repacking facility in Minnesota in the first half of November 2021. Fagron must immediately resolve the identified issues, according to the FDA. Failure to do so could lead to legal action, the regulator reports. Analysts at the time said that the soup will not be as hot as served. However, they believe that Fagron must take serious steps to solve problems in the repacking facility in Minnesota. The stock was down 12 percent this week.
TINC announced three investments this week, involving a total amount of 48 million euros. According to Kepler Cheuvreux, the short-term capital investor will be to fund all investments.
This week, DEME was also listed separately for the first time, as announced by parent company CFE at the end of last year. This result was positive for the DEME share, which rose, but not for CFE in gold. KBC economist Tom Simonts had also foreseen such volatility. On Friday, KB securities put both targets on the buy list with a price of C of 15 euros.
Azelis also announced a series of acquisitions, Jefferies started tracking the stock with a Hold rating and a price target of 22.00 euros. The analyst sees more opportunities for Dutch peer IMCD than for Azelis.
Proximus announced on Friday that TeleSign’s IPO has been cancelled. Not a big surprise, according to ING. KBC Securities lowered the price target from 20.00 to 18.00 euros, with a permanent Hold advice. It fell 0.6 percent.
The biggest climbers this week were Lotus Bakeries and Home Invest, who added percent. The biggest decliners were VGP and Aperam with losses of 8 and 9 percent.
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