Cac 40: CAC hits its best month since November 2020, up 7% in July

(BFM Börse) – After a bumpy month in June, the good trading days are returning. With a plus of over 1.7% on Friday evening, the CAC 40 closed this trading month with a plus of 7% at 6,400 points. The optimism wafting through the Paris market is explained by hopes of a more accommodative Fed on its future monetary policy and better than expected corporate earnings.

For the last session in July, the Paris Stock Exchange didn’t do things by halves, closing sharply down 1.71% to 6,400 points at 6,448.50 points, its highest level since June 8. The day’s strong rebound brings the Paris Star Index weekly gains to 4.07%, adding to the 3% already achieved the previous week.

The recovery of the day in Paris this time is thanks to globally acclaimed corporate results, such as Air France-KLM, which returned to profitability for the first time since 2019, or Renault, whose good focus on margins was hailed despite setbacks in Russia. Luxury shines again this Friday with Hermès and L’Oréal.

The Paris Stock Exchange in particular ended this traditionally prosperous month on the financial markets with a full plus of 7.27% and thus ended a series of five out of seven monthly declines since the beginning of the year – whereby the positive development of March was at … 1 point or +0.02% limited. This is the CAC 40’s best monthly performance since November 2020 (+20.12%). Above all, this beautiful month allows the Paris Stock Exchange to keep its annual losses below 10% since January, after -18% at the last reading in June last year.

Soothing growth in the Eurozone in Q2

Earlier in the morning, investors heard reassuring data on the health of Europe’s economy. Economic growth in the euro zone was stronger than expected in the second quarter at 0.7% compared to the previous quarter. The only downside is inflation, which is still high at 8.9% over the year in July, down from 8.6% in June.

Sentiment is also up in New York, with the American square also poised for its best month of the year, buoyed by the good reception reserved for the tech giants’ results. Closing out European equity markets on Wall Street, Amazon and Apple were up 11% and 2.45%, respectively. These performances pushed a fresh acceleration in inflation into the background in June. Consumer prices rose 6.8% year-on-year and 1.0% from May, according to the PCE index, one of the Fed’s preferred indicators of inflation to guide its monetary policy.

On the business front in Paris, a new series of periodical publications was scheduled for this Friday before the summer break, although some rating heavyweights such as Bouygues, Veolia, Axa or Société Générale will report in the first week of August.

Hermès star of the day

At the top of the CAC 40 (for price increases), Capgemini took the crown from Hermès and ended this Friday up 8.6%. The IT services giant has raised its growth target for 2022 after robust half-year results.

Hermès International moved up to second position, closing up 7.5% the day after a brilliant half-year release. The saddler reported a current operating margin of more than 40% during the period and net half-year earnings that were also up sharply, up 39.7% over the year. L’Oréal, up 2.45%, saw the cosmetics giant post a sharp increase in sales in China in the second quarter.

Renault rose 5.10% after raising its annual operating margin and free cash flow targets. The group announced higher margins in the first half as the diamond brand moved higher.

On the other side of the chart, Vivendi fell 8% after releasing its half-year results. According to a press release, the group is considering selling Editis to avoid the pitfalls related to the merger with the Lagardère group, owner of Hachette

EssilorLuxottica limited its losses to 1.9%, punished by a slowdown in its activity in the second quarter, which did not prevent the optics giant from posting an increase in its operating margin in the first half of the current year.

Air France takes off

Excluding the flagship index, Air France-KLM rebounded 4.4% after posting positive net income in the second quarter amid a recovery in its post-pandemic activity.

X-Fab, for its part, fell 14.3%, the supplier to the semiconductor industry downgrading its growth forecasts for 2022.

On the foreign exchange market, the euro is stable at 1.0219 dollars. On the oil side, prices suddenly accelerated a few days ahead of the meeting of the Organization of Petroleum Exporting Countries and its allies. WTI rose 4% to $101.29, while a barrel of North Sea Brent rose 2.20% to $110.18.