(News Bulletin 247) – The Parisian index ended not far from balance this Thursday, undermined by the heavy decline of the railway equipment manufacturer after a warning on its cash consumption. Alstom shares fell nearly 38% at the close.
The Paris Stock Exchange had to deal with the heavy fall of one of its residents, namely Alstom, which collapsed by 37.6% at the close on Thursday evening, after its mega-warning on its cash flow.
The CAC 40 finished with a symbolic increase of 0.02% but still remained stuck below 7,000 points, at 6,998.25 points. This is the first session of increase (even if modest) of the week, the day after a close in perfect balance and two significant declines on Monday and Tuesday.
The big news is obviously on the value side, with Alstom’s plunge of more than 37%, a drop rarely seen on the Parisian index.
The equipment manufacturer has issued a mega-warning on its cash flow, and plans to burn between 500 million and 750 million euros of cash in the current financial year which will end next March, while it had previously anticipated that cash generation would be “significantly positive” over the financial year. The fault lies in a first half during which the group disbursed more than 1 billion euros in cash, according to preliminary data.
These unexpected announcements are enough to bring back to the table investors’ doubts about the robustness of Alstom’s balance sheet, even though the financial director, Bernard Delpit, has ruled out a capital increase.
On the macroeconomic side, unemployment claims increased less than expected, to 207,000 applications, which is below market expectations, housed at 210,000 units.
But the big meeting is of course Friday, with the publication of the official report on American employment. The consensus expects a drop in job creation to 170,000 jobs after 187,000 in August and an unemployment rate falling from 0.1% to 3.7%. The average wage, which is closely monitored to gauge price pressures, is expected to increase by 0.3% in September and 4.3% year-on-year.
The statistic will likely have a big influence on the bond market. The slightest sign of tension on the labor market will push up government bond yields. The 10-year American bond rate is at 4.74% after being close to 4.80% the day before. The German rate is at 2.875% and its French counterpart of the same maturity is trading at 3.454%, still at 2011 highs.
Maisons du Monde in the tough
On other stocks, Air France-KLM gained 3.8%, the market reacting one session late to the group’s acquisition of a stake in SAS, the Swedish company, which augurs a consolidation of the market. As well as an increase in recommendation from Bernstein.
Maisons du Monde plunged more than 15% while TP ICAP Midcap went to “sell” on the issue, judging the publication of sales for the third quarter “at risk”.
On the smaller cap side, Hexaom gained 12.4% after showing its confidence for 2023, despite a difficult market environment for house construction.
On other markets, the euro gained 0.2% against the dollar to 1.0525 dollars. Oil prices continue to fall. The December North Sea Brent contract lost 2% to $84.06 per barrel, while the November contract for WTI listed in New York also lost 2% to $82.50 per barrel.
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