The stock market went on a roller coaster this week. After a rag in the first part of the week, stocks recovered on the Paris Stock Exchange and Wall Street from Wednesday (at the time of writing, the Nasdaq gained 3% on Friday and the S&P 500 nearly 2%). The first days of the week clearly saw the return of the “risk-off” (investors sought out the assets considered to be the least risky and sold those that were the most). Government bonds therefore fared well, while equities faltered.
This “contrasted with that of the first week of May when all asset classes were in decline”, underlines La Banque Postale Asset Management, for which the market “is trying to identify the trajectory of the economies in a situation which relatively new for many decades”. We can indeed wonder about the trajectory of growth for 2020, in a context of extreme inflation and more or less rapid normalization of the monetary policies of the central banks, after their ultra-accommodating since the Covid-19 crisis initiated in 2020. And this, while the risks linked to the war in Ukraine tend to increase, according to certain observers.
The tightening of monetary policies by the Fed and the ECB, which comes despite the slowing economy, is a headwind for equities. On the other hand, the valuation of certain parts of the rating is now more attractive, while the extreme pessimism currently measured on the markets could, in a contrarian logic, favor a technical rebound, which currently seems to be taking shape.
However, a degree of caution should still prevail in the coming months on shares listed on Wall Street, especially since in the United States, “the Fed is severe, bonds have depreciated (long-term rates, which move inversely to prices, have therefore soared, thus making equities less attractive due to arbitrage phenomena, editor’s note), the slowdown in growth is pronounced and American equities remain more expensive than those of other countries says Frédéric Rollin, investment strategy advisor at Pictet Asset Management.
This week, Momentum, Capital’s premium newsletter on the stock market and cryptocurrencies, once again succeeded in doing well. We gauged the outlook for the CAC 40 and Wall Street (S&P 500, Nasdaq), as well as those of many stocks: Sanofi, STMicroelectronics, Apple, L’Oréal, Dassault Systèmes, Aurea, Tesla, Schneider Electric, Air Liquide, Alten, Alstom, Microsoft, TotalEnergies, and other stocks to be favored in a context of high inflation. And this, with upward and downward expectations. On the cryptocurrency front, we assessed the outlook for Bitcoin, as well as Algorand (an analysis by Laurent Albie, manager of Next Momentum and member of Afate).
Among the reasons for satisfaction, we have identified good entry and exit points on many stocks, as well as the most relevant chart thresholds on Bitcoin. We warned our subscribers in time about the upcoming air pockets in Apple, Tesla and Microsoft stocks. The recent technical rebound in the markets was correctly anticipated. And our anticipations of the previous months continued to generate gains (Orange, Carrefour, etc.) for our subscribers.
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Author’s declaration of interests