© Reuters. The results of companies are the european stock Exchanges and Wall Street
by Blandine Henault
PARIS (Reuters) – The european stock markets have ended the week on a note is significantly positive, driven by strong publications of results of companies who are also supporting the trend on Wall Street, despite questions about the evolution of currencies.
In Paris, the CAC 40 finished Friday up 0.88% to 5.529,15 points, boosted by the jump with 4.89% of LVMH (PA:LVMH), the initial capitalization of the index.
The Footsie british took to 0.65% and the German Dax gained 0.31 per cent.
The index EuroStoxx 50 rose 0.46%, the FTSEurofirst 300 climbed 0.54% and the Stoxx 600 has not only gained 0.48 per cent.
Throughout the week, the CAC 40 finished virtually unchanged (+0.05%) and the Stoxx 600 was down 0.1%, penalized by the rise in the euro.
Has Wall Street, the benchmark indices are up and on-record levels, supported by the surge in Intel (NASDAQ:INTC) (+9,55%) and the increase in the pharmaceutical sector after the results of the biotech Abbvie (+for 9.28%).
“Thanks to the reform of u.s. tax, to the increase in oil prices and the effect of the economic environment, earnings forecasts have been revised upwards by about 4% since the beginning of the year” for companies in the S&P 500, keep the strategists of Deutsche AM.
“Even if these support factors are likely to fade away as the year goes on, the rally (Wall Street) could well continue as the forecast of earnings will continue to improve”.
DONALD TRUMP IN DAVOS
In Europe, the star of the day was LVMH, the largest increase in the CAC 40 and the Stoxx 600, after the publication of the annual results above expectations.
In its wake, Christian Dior (PA:DIOR), part of the luxury group, has won 4,66%, while the other giant French luxury Kering (PA:PRTP), has climbed from 2.64%.
Still in Paris, Michelin (PA:MICP) (+2,25%), Thales (PA:TCFP) (+2,78%), and M6 (+3,66%) were also supported by positive recommendations from analysts.
Conversely, satellite operators Eutelsat (-6,96 %) and ITS (-5,69%) showed the largest declines in the SBF 120, while Barclays (LON:BARC) has lowered its recommendation on the second, highlighting a serious risk to the dividend.
Elsewhere in Europe, the distributor of south african furniture Steinhoff jumped to 4.12% after it said Friday it has resolved the majority of its cash crisis, triggered by the discovery of”accounting irregularities”.
Beyond the publications of results, investors have also been attentive to the speech of Donald Trump at the economic Forum of Davos, in a context of fears of a possible “currency war”.
The us president has warned that the United States would not stand for more than what he has described business practices are “unfair” while ensuring that his program ‘America First’ does not mean an isolation of his country on the international stage.
On the other hand, Donald Trump has not réabordé the dollar issue although his comments on the subject and those of his secretary of the Treasury Steven Mnuchin could seem contradictory.
PERSISTENT WEAKNESS OF THE DOLLAR
On Wednesday, Steven Mnuchin had explained that a weak dollar was good for U.s. exports, which had pushed the greenback to its lowest level since December 2014. The u.s. currency then bounced back on Thursday when Donald Trump said he was in favour of a strong dollar.
But the rebound was short-lived : the dollar index, a measure of its evolution in response to a basket of reference currencies, losing Friday to 0.41% in spite of a net upward movement in yields in u.s. bond.
At the same time, the euro is gaining 0.23 percent against the u.s. currency but remains under the bar of 1.25 that it has taken the day before after statements of the president of the european central Bank, Mario Draghi, on the recent acceleration of economic growth.
The greenback has hardly been helped by the statistics of the day : the economic growth of the United States has slowed more sharply than expected in the fourth quarter, hurt by a jump in imports caused by the effect of household expenditure and by a low accumulation of stocks.
This context is not to encourage the u.s. federal Reserve (Fed) to change its interest rate policy at its next meeting on Tuesday and Wednesday, which will be especially that of the farewell of the president Janet Yellen, who was forced to give up her seat to Jerome Powell.
(edited by Juliette Rouillon)