The first weekly sequence in July ended with a rise of 2.5% for European equities (STOXX Europe 600 Net Return) and just over 2% for American equities (S & P500). On the Asian markets side, Japanese stocks grew in the same proportion with a rise of 2.30% (Topix) while Chinese stocks set the time with a yield of 0.93% (Shanghai Composite), a pause that comes anyway after five consecutive weeks of rise. The VIX index, which measures market nervousness, continues to drop to 24 points. However, the sentiment emerging from the previous weekend is a bit muddled. Probably because economists and financiers are completely in the dark, the former to accurately predict the trajectory of growth and inflation in developed economies, the latter to predict monetary tightening by the Federal Reserve sufficiently in advance.
In this regard, the latest US employment report somewhat undermined investors’ bets on the “it’s bad then it’s okay” scenario, believing that the deterioration of economic indicators would limit the Fed’s strict stance. Conversely, the job market is faring much better than expected as US companies created 372,000 jobs in June, far more than the 265,000 predicted by the Bloomberg consensus. We are therefore still a long way from the box of the “recession”, which in recent weeks has been flowing a lot of ink. Investors are therefore expecting action taken by the Fed, which is expected to raise rates by 75 basis points at the end of the month, a necessary evil to drain liquidity and the inflation that accompanies it. Looking at the CME’s FedWatch tool, I found that the market has even paved the way for a 100 basis point rate hike, but let’s face it, the likelihood of such a hike remains low (less than 10%).
Let’s not stray from the monetary policy register because the theme of central banks will be the protagonist this week with comments and press conferences from central bankers from all sides, with the Fed (today and Thursday), the BOE (today and tomorrow), the BOC (who will make a decision on the rate on Wednesday). The BOJ has already opened the dance tonight. True to form and counter to the rest of the world, the Japanese central bank said it could take further monetary easing measures if needed. Finally, in terms of major macroeconomic events that will want to turn red in your calendars, the first US inflation data for June is expected on Wednesday. Producer prices will follow Thursday and retail sales on Friday, the same day as the University of Michigan Consumer Confidence Index. Suffice it to say that there will be a lot to fuel the great debate on growth and inflation.
Also, some news not to be missed this weekend:
- As social turmoil is intensifying in Sri Lanka, the island is bearing the brunt of rising prices.
- Joe Biden will travel to Saudi Arabia this weekend to achieve increased oil production.
- The French government is preparing people’s minds for a probable total cut of Russian gas.
- Beijing announces new sanctions against its tech giants, including Alibaba and Tencent.
- Four new candidates claim to have succeeded Boris Johnson.
- Elon Musk renounces the acquisition of Twitter.
European leading indicators are bearish this morning. In Asia, Japan is up, investors appreciate the ruling coalition’s big win but China is down: tech stocks are hurting as the Chinese regulator announced a new round of sanctions against its tech giants and news is not very good on the COVID front in Beijing. As a result, the Hang Seng contracted more than 3% overnight.
The economic highlights of the day
There will be no big economic statistics on the agenda at the start of the week.
L’EUR is trading at USD 1,014. The ounce of gold stagnates at USD 1742. The oil drops slightly with a Brent from the North Sea to 106 dollars a barrel and an American light crude WTI for $ 103. The performance of the American debt at 10 years it rose slightly to 3.08%. the bitcoin loses ground at USD 20,500.
The main changes in the recommendations
- ABB : Citigroup goes from buy to neutral and lowers the target from 35 to 29 CHF.
- Adidas: Deutsche Bank remains long but revises its target from 305 euros to 240 euros.
- Allianz: Jefferies is still long but with a reduced price target from 255 to 240 EUR.
- Alstom: Citigroup lowers the target from 42 to 38 EUR.
- Axa: Jefferies maintains its buy recommendation but reduces its target from 30.50 to 28 EUR.
- BHP Group: Jefferies is long but revises the target downwards, from 82 to 77 AUD.
- Electricité de France: JP Morgan increases its overweight recommendation with a price target of 12 EUR.
- FlatexDegiro: Morgan Stanley begins follow-up with an underweight recommendation.
- Fraport AG: JP Morgan is neutral with a reduced price target from 55 to 51 EUR.
- Holcim: JP Morgan moves from short to neutral with an unchanged price target of CHF 53.
- Julius Bar: RBC continues to outperform but lower its target from CHF 60 to CHF 58.
- Legrand: Citigroup lowers its target from 85 to 80 euros.
- Levi Strauss: Morgan Stanley remains long but lowers the target from 33 to 19 USD.
- Life Storage: Citigroup is a buyer but revises its target from $ 150 to $ 133.
- Malibu Boats: Truist Securities is long but lowers its target from $ 80 to $ 70.
- Morgan Stanley: Jefferies is still a long way off but is revising its USD 109 to USD 97 target.
- NVIDIA: Tigress Financial remains long with a target price reduced from 410 to 310 USD.
- Pernod Ricard: Deutsche Bank remains on the buy side with a price target increased from EUR 234 to EUR 242.
- Renault: Jefferies is still buying at 40 euros while Stifel, who is also buying, lowers its target from 55 euros to 41 euros.
- Roche Holding: UBS moves from seller to neutral but lowers its target from 345 to 328 CHF.
- Siemens Gamesa: Mirabaud Securities goes from long to neutral with a target of 18.10 euros.
- Soitec: Deutsche Bank lowers the target from 225 to 175 EUR.
- The Charles Schwab: Jefferies remains long with a reduced price target from USD 95 to USD 78.
- Tradeweb market: Credit Suisse is still long but lowered the target from 101 to 88 USD.
- Wells Fargo: Seaport Global Securities remains long, but lowers the target from 67 to 57 USD.
Important (and less important) announcements.
- STMicroelectronics and Global Foundries will create a semiconductor factory in France, an investment of around € 4 billion according to Le Figaro.
- Sanofi and Swedish Orphan Biovitrum AB present positive phase 3 data in haemophilia A.
- Airbus delivered 60 commercial aircraft in June and recorded 78 new orders.
- Neoen starts construction of its first wind farm in Sweden.
- Vallourec appoints a new Director for South America.
In the world
Important (and less important) announcements.
- Netflix crosses the threshold of 10 million subscribers in France.
- Beijing fines Alibaba and Tencent for failing to comply with antitrust rules.
- Elon Musk renounces the purchase of Twitter, which has initiated legal proceedings.
- Tesla will stop production for two weeks at its new plant outside Berlin.
- Dufry buys the Italian Autogrill.
- Volvo Cars will leave the Association of European Automobile Manufacturers (ACEA).
- Danske Bank lowers profit forecast for 2022.
- Aker BP discovers a gas field in the Norwegian Sea.
- Wind turbine manufacturer Nordex will launch a $ 215 million fundraiser.
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