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A stock market rebound is emerging

  • Post category:Economy News
  • Reading time:4 mins read

Analysis Georges Severin

The stock markets recorded positive developments during the last sessions. The BEL20 index ended the week on an increase of 1% before a week which will be very busy in terms of corporate results.

The Belgian market underperformed the surrounding markets, with rebounds of 3% for the CAC40 (Paris) and the Dax (Frankfurt), even 5% for the AEX (Amsterdam). Positive movement also in the United States, where the S&P500 rose by 2.5%, and now shows a rebound of almost 9% since mid-June.

Inflationary expectations

This positive performance for European equities was achieved paradoxically during the week when the European Central Bank ended its negative policy rate experiment two months earlier than expected. By raising its key rate from -0.5% to 0%, the European financier put an end to this policy initiated in 2014 under Mario Draghi.

The ECB also announced the establishment of a new instrument aimed at avoiding the dislocation of the euro zone.

“With this move, the ECB implicitly recognizes that the current environment is delicate, with inflation growing faster while the economy is slowing down”points out Andrew Mulliner (Head of Global Strategies at Janus Henderson). “She had to act faster than initially planned”. At the same time, the recognition of a more difficult economic climate is likely to limit the upside potential for bond rates, an observation which was ultimately relatively well received by stock market investors.


Similarly, expectations for rate hikes for the US Federal Reserve tended to moderate, which was enough to also help put a smile on the stock markets.

At Fidelity, Steve Ellis (Global Head of Bond Markets Investment Strategy) points out “that central banks will find it increasingly difficult to raise their rates in the face of the deterioration of the economic climate”.

On the foreign exchange market, the European currency recovered against the dollar following the unexpected firmness of the ECB, rising 1.5% over the week to end at 1.023 dollars.

Results and investments

In Brussels, the star was undoubtedly Barco, whose share price exploded by more than 18% to return above 25 euros and end the week at its highest levels since the outbreak of the pandemic in 2020. The group had was one of the main Belgian victims of the pandemic due to its exposure to the cinema sector, with a price which had plummeted from 34 to 15 euros in a few weeks. The group had been forced out of the BEL20 index. The figures published at the start of last week confirmed the recovery in activity, with a well-filled order book which bodes well for continued growth in the second half.

Telenet slashes its dividend

Conversely, Telenet lost 16% during the past week despite the announcement of its development agreement with Fluvius. The telephone operator announced that it was going to slash its dividend in order to be able to finance the deployment of its fiber optic network over the next ten years. This may be positive news for the group’s medium-term outlook, but negative for investors who held the stock hoping to receive high dividend flows in the coming years.

Important week

The coming week should be one of the most important of the year in terms of Belgian corporate results, with half-year figures from AB Inbev, ArgenX, Elia, Solvay, UCB, Umicore, WDP and GBL to be announced between 27 and July 29.

But small and mid caps will also be honored with Melexis, Cofinimmo, Telenet, Proximus, Econocom, Bekaert or Ontex.