the CAC40 accelerates with Trump and LVMH

Aymeric Val,

published on 10/10/2019 at 18h00

(Boursier.com) – THE TREND

Without clear direction early in the day, the CAC40 has pressed the accelerator at the end of the session to close on a very positive, up 1.27% to 5.569 points. The trigger came in the middle of the afternoon from a rather encouraging tweet from Donald Trump on the trade issue. The US president announced that he will receive Chinese Vice Premier Liu He tomorrow at the White House. A very positive signal, which underlines the willingness of Beijing and Washington to move towards an agreement on their trade, although it is of course necessary to remain cautious, the twists in these Sino-US negotiations having been numerous these last months.
According to press reports, China would be willing to reach a partial agreement in the new round of negotiations that opened today. Beijing intends to stop the deterioration of its economy. If this new round of talks fails, Washington plans to raise taxes on imports of $ 250 billion worth of Chinese goods by October 15, and then introduce tariffs on all Chinese goods. imported in December. If Washington gave up these new taxes, Beijing would be ready for concessions, including in the form of purchases of US agricultural products, according to sources quoted by the Financial Times. China, however, would not be willing to advance on more fundamental issues, yet dear to Washington, starting with a reform of Chinese industrial policy, as well as the issue of state subsidies.
On the values ​​front, LVMH launched the quarterly season very well with a new high quality publication.

ECO AND CURRENCIES

In Europe, EU finance ministers have reached an agreement on the conditions for implementation of a euro area budget that will come into force in 2021. This budget will be endowed with about 17 billion euros. euros and will be devoted to investment and support for economic reforms. This amount corresponds to the share allocated to the euro area out of the 25 billion euros that the European Commission proposes to devote to economic reforms in the EU.

In the United States, the consumer price index for September 2019 came out as expected stable in comparison with the previous month (+ 1.7% yoy). Excluding food and energy this time, the 'CPI' rose by 0.1% compared to the previous month, against + 0.2% consensus. It is up 2.4% year-on-year. A month earlier, the CPI was up 0.1% (+ 0.3% excluding food and energy).

The US Department of Labor has announced the figures for jobless claims, which stand at 210,000 for the week ended October 5, 2019, against a consensus of 219,000 and a level of 220,000 a week earlier.

VALUES INCREASED

* LVMH was 5.6% to 376.85 euros. The world's number one luxury has once again exceeded all expectations in the third quarter, ignoring the tensions in Hong Kong or the slowdown in global growth. Over the three months ended at the end of September, the owner of the Louis Vuitton, Dior, Bulgari and Sephora brands posted sales of € 13.3 billion, up 17% on a reported basis and 11% on an organic basis. The consensus was 9% on a comparable basis.

* kering and Hermes climbed by 4.2% and 1.3% respectively in the wake of LVMH. The world's leading luxury goods company once again made a strong impression in the third quarter, showing no signs of waning despite fears over global growth and the giant protests that have been shaking Hong Kong for several months. RBC reports an impressive performance for LVMH's 'Fashion & Leather Goods' division, which should appease the most pessimistic worries as the former British colony is a key market for the sector.

* Saint Gobain jumped 4.1% to 35.24 euros, helped by a note from Morgan Stanley. The US bank explains that the group offers exposure to attractive end markets, a good regional presence while the organizational restructuring should support the margin. What to go from 'underweight' to 'overweight' by targeting 42 euros, against 37.5 euros previously. Given the uncertainties in the construction market, the broker appreciates the group's high exposure to renovation and infrastructure, and its low dependence on new residential markets. Finally, MS estimates that the value is the last true 'value' share after the underperformance of the security over the past two years.

* Plastic Omnium rebounded 6.8% to 22.29 euros. The shock wave of the profit warning realized yesterday by the equipment manufacturer is still not dissipated. Witness the goal adjustment made today by JPMorgan. The research office has reduced from 26 to 24 euros its 'fair value' on the record and renews its recommendation "neutral". It follows suit Oddo BHF, whose target price has been lowered 30 to 25 euros, with a "buy" opinion despite everything renewed.

* The compartment of automotive equipment suppliers was sought, in the wake of announcements on Sino-US trade negotiations. Valeo was awarded 3.8% to 30.19 euros and Faurecia has grapple 3.2% to 41.84 euros.

* Neoen (+ 0.4% to 22.95 euros). The buying power is galvanized by the change of recommendation of Clémence Blenck, an analyst at Société Générale, spent on the purchase on the renewable energy specialist with a target price of 27.5 euros, at the top of the range of objectives of the brokers. The consensus is still neutral overall Neoen with a majority of opinions "keep" on the record. It is true that the independent producer of green energy has seen an increase of more than 20% since the beginning of the year, close to historic peaks.

* Renault (+ 0.6% to 50.80 euros). The replacement of the managing director of Thierry Bolloré, Carlos Ghosn's former right-hand man, is likely to emerge on the horizon, according to concordant sources. Thus, on Wednesday evening, a source in the French state confirmed to Reuters that Jean-Dominique Senard, president of Renault, was considering proposing to the board of directors to find a successor to Mr. Bolloré.

* Great advanced 0.2% to 65.66 euros, close to historic highs. The news on the electrical equipment supplier is to look for an analyst cover initiation. Bryan, Garnier & Co began monitoring by adopting a "neutral" recommendation and setting its "fair value" at 70 euros. The research bureau appreciates the strategy of progressive reinforcement in the digital infrastructures, main lever of acceleration of the development of the group, but considers the action well valued: "The market seems to have well anticipated the growth prospects and the value is treated of "still elsewhere with a certain premium over the capital goods sector.Finally, uncertainties on the global macro could penalize the title," argues BG in his study.

VALUES FALLING

* Valbiotis fell by 16.9% to 2.41 euros. The Group is launching a capital increase with shareholders' preferential subscription rights of up to ME 7.2 million, which can be raised to ME 8.3 million if the extension clause is exercised. Moreover, regardless of the final amount of the offer, the company indicates that it will face new funding needs to at least finalize Valedia's clinical program in order to be able to file a health claim with the authorities. competent authorities (Europe and the United States).

* Bastide (-3.1% to 36.10 euros) after unveiling its annual results. The 2018-2019 accounts are characterized by an improvement in current operating profitability and a decrease in net income, impacted by various non-recurring charges and by the accounting adjustment of the fair value of the price supplements, for E6.4 million. mainly outperformance of Baywater in the United Kingdom.

* Pernod Ricard nosedicated (-1.1% to 170.4 euros), on profit taking. The spirits group yesterday announced the finalization of the acquisition of Castle Brands, which owns, among other things, Jefferson's bourbon for $ 223 million. Analysts side, AlphaValue has reiterated its advice 'accumulate' with a target adjusted to the margin, from 187 to 186 euros.

* Atari still can not stabilize (-1.4% to 0.28 euros), penalized by the information on the future of its Atari VCS console. Tuesday, the sulphurous British technology news site 'The Register' said that the retro console architect, Rob Wyatt, would have simply left the project. Atari responded by saying that the project was proceeding according to its previously announced schedule.

* Always in the world of video games, Ubisoft went down again (-2.3% to 56.88 euros), investors worried about the commercial start of the big budget game Ghost Recon Breakpoint, a target of some critics. On the analysts' front, AlphaValue began monitoring the publisher with a "buy" notice and a target price of 80.6 euros.

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